In Whose Name? The Costs and BenefitsInvesting in your child's name may offer tax benefits now but it also may have a cost later on when it comes to financial aid. Students are expected to contribute a greater percentage of their own assets toward education than are parents.
To see how assets held in a child's name may affect the amount of aid received, you can visit the web site for the College Board, www.collegeboard.org. This site's Expected Family Contribution calculator allows you to enter your personal financial information and then produces an estimate of your Expected Family Contribution (EFC) toward education. The EFC is the figure most colleges use to determine the amount of financial assistance a student is eligible for. Understanding how schools determine your financial need can help you to decide whether the tax benefits of investments in your children's names outweigh the loss of financial aid that might result.