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I'm a student at Cornell University, which has a fairly good financial aid policy that provides me with free tuition. The yearly fees are prohibitively high for my family, essentially more that what my whole family earns every year, so without this aid, I would not be able to attend the school.

This year I took a semester off to work at a company under a school sponsored program. Since I've been working full time for 4 months, my salary has become quite significant.

As you guys may be aware, the way financial aid works is that only a fraction of the parent's salary goes into tuition, but the majority of a student's income goes in it. This isn't too big of an issue when I did odd jobs during the school year. But I earned something near 20k, before tax. This could mean that my next school year will be very expensive.

How can I go about avoiding this? I'm not too keen on having all my salary put into tuition. Half of the salary is actually for housing so I could argue that aspect with financial aid, but the other half is just as significant.

What should I do with this money? Invest it? Give to my parents?

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  • You do realize or have enough of education to understand that nothing is free, especially schools. Your tuition was paid indirectly by other students who probably were just as poor as you but on paper they looked like "middle class" so they don't get anything but borrowing. Trust me, i've been doing it for a very long time (fin.aid office) and 've seen it all.
    – user51641
    Commented Dec 21, 2016 at 20:55

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The point of financial aid is to provide the difference between the price of college and what the student (and family) can pay. If your income goes up, that difference goes down, and you are obligated to pay more. "Avoiding" this would be tantamount to fraud.

When you reapply for financial aid and declare the new income, you also should tell the financial aid office that it is not ongoing income, which they should take into account.

Be honest. Tell the financial aid office exactly what your circumstances are. You must declare the savings you made after taxes and expenses, which they will expect you to use (partially) for your next tuition bill.

Your college education is an investment. A Cornell degree should help you earn much more money over your lifetime. The school-based, paid internship got you useful experience that will also help you get a better job after college. The money should be used now to help pay for your schooling.

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    +1 for "Avoiding" this would be tantamount to fraud. If I could another +1 for Tell the financial aid office exactly what your circumstances are. - Because it is an internship sponsored by the university it may mitigate the impact of the pay toward your financial aid depending on what the OP gets.
    – user4127
    Commented Dec 16, 2011 at 14:21
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    +1 - I appreciate your intent. In my world, I make a distinction between tax avoidance (legal) and tax evasion (illegal). My gut reaction to the OP, is same as yours, 'pay your fair share.' but on further reflection I read his question similar to how people ask how to arrange their affairs to minimize their taxes. (disclaimer - my wife and I are blessed with good jobs and only one child. College is fully funded out of our pockets. This issue is not personal for me, completely objective.) That said, since the school was involved setting up the job, OP needs to ask the aid office for impact.
    – JTP - Apologise to Monica ♦
    Commented Dec 16, 2011 at 14:41
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    I think calling this fraud is stretching it a bit far. For one thing, like Joe said, people often rearrange their affairs to minimize taxes. It is also a common practice to rearrange affairs to lower EFC. Plenty of funding college help books have suggestions like making sure the child has little money in his bank, etc. But having this on my taxes is a different story, thats why I was wondering if any similar method would still work.If similar methods would still work, how could it be fraud? If it doesn't work, then I'll just have to talk with the finaid office like you guys sugested
    – mugetsu
    Commented Dec 16, 2011 at 19:10
  • @mugetsu - Sorry if that came off too harshly. Planning appropriately to minimize taxes or expected family contribution for college is certainly not fraud. Attempting to hide income or assets that would normally be considered in financial aid decisions may very well be, however. The main point is that providing all information to the financial aid office is required, both legally and ethically. My experience in college was that the FA office was pretty good about working with changing family circumstances if I went in and talked to them.
    – Rick Goldstein
    Commented Dec 16, 2011 at 23:39
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You might have a chance of doing something creative, if you were going to a state school, but not at a private university. Private universities have their own financial aid system and rules and are generally much much harder to game than the FAFSA. Your best bet is to go through their financial aid application and figure out what they consider income/assets and try to get any or all of the money into something that isn't accounted for.

Things to look out for are which line do they take income from on your tax returns? Are there tax deductible places you can put money (401k,IRA,HSA) to reduce the amount on that line? To a lesser extent the other thing to look out for is which asset classes are counted for financial aid? For instance at private schools it is common to count IRA/401k but not whole life insurance against you, while the FAFSA doesn't count either.

I would strongly advise against lying, on your financial aid application, but there is nothing wrong with using the rules that already in place to your advantage.

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