Straight Talk Bob McDonnell

Did you know that cash gifts, which are paid directly to the college for tuition and fees (from people other than the parents) should be avoided. These gifts will be treated as a student “resource” and a dollar-for-dollar deduction in financial aid.

Other things to be aware of:

• Student income. The student’s income should be limited during college years. Shifting income to the student should be considered if the student does not have this much income. This will typically lower the parent’s Adjusted Gross Income (AGI) without having a negative effect on the student’s financial aid eligibility.

• Capital gains. The family should consider selling stocks in non-college years that would otherwise generate capital gain distributions during college years.

• Loan proceeds. Seeing that loan proceeds are not assessed in the financial aid formulas, it is often better to borrow funds during college years rather than attempting to pay for college by striving to increase earnings, which will decrease financial aid eligibility.


• Bob McDonnell is executive director of Arizona College Planners, L.L.C., a member of the College Planning Network, the National Association of College Funding Advisors and the National Association of College Acceptance Counselors. For questions, email

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