A cash gift can be an important factor when it comes to financial aid for college tuition. Cash gifts can have a positive or negative effect on a student’s ability to receive financial aid. Depending on the type of college the student is hoping to attend, the amount of financial aid provided and the student’s specific situation, it can have a great impact on the amount of aid for which a student may be eligible.
What is a Cash Gift?
Money given to someone without expecting anything in return, like a birthday present or family-funded tuition assistance. These gifts come with no conditions or repayment expectations.
How a Cash Gift Affects Financial Aid
Cash gifts can impact various forms of financial aid differently based on distribution and amount.
Some Types of Financial Aid
Scholarships: Scholarships are forms of financial aid that students do not have to pay back. Students can use cash gifts from family or friends to supplement their scholarship funds, but they must declare it on their FAFSA.
Grants: Cash gifts, when from a student, should be reported because they may reduce the student’s eligible aid amount. Grants are forms of financial aid that do not require repayment.
Student Loans: It usually does not affect student loan eligibility. Using the gift to pay off student loans can impact loan forgiveness programs, so it’s crucial to consider this aspect.
Final Thoughts
Overall, it can have a great impact on a student’s ability to receive financial aid. Depending on the type of aid the student is looking for, as well as the amount of money given, the cash gift can either be beneficial or detrimental to the amount of financial aid the student is able to receive. It is important to be aware of how cash gifts affect financial aid when making decisions and planning for college tuition.
