Asking for another family that recently very tragically lost the higher earning parent: What impact does life insurance and a worker’s comp lump sum settlement have on FAFSA and resultant aid award? Should the Aid award now be appealed so that the use of prior prior year income does not impact the award? The student will be a freshman at a state university in Fall 2017–unless chooses to take a gap year to allow time to grieve.
I’m a transfer accepted to multiple UC’s. Had my dad passed away my freshman year, and he left life insurance of around $400k, which my mom spent on mortage down to $130k. I looked at my financial aid for all the school’s that I’ve been accepted to, & and they all gave me grants from $8k upwards to $13k. I was not expected to get ANY financial aid, even w/ just my mom working (because they both had pretty high incomes), and the UCs did so they definitely put in special consideration for your family member’s circumstance. Just wanted to give my 2 cents.
Thank you @jrohazn. Sorry for your loss.
Generally, life insurance death benefits will not be reported on FAFSA as income, but any amount held at the time of FAFSA completion must be reported as an asset. Workers’ compensation is identified on FAFSA as a reportable untaxed income item, and as with a life insurance death benefit any amount held at the time of FAFSA completion must be reported as an asset.
I’m sorry for your loss.
In the case of @jrohazn his dad passed away before his fafsa was filed, so he was not required to include the income of his dad from 2015 for the 2017-2018 fafsa.
Did this student submit his fafsa while his dad was still alive? If so, he needs to contact the college…and request information about a special circumstances consideration. the college will tell you what to do, and what documentation they need. They will want any info regarding the workmans comp payment and when it was paid.
There should be a form on the financial aid portal asking for professional judgment. Each school will ask for documentation it wants and then make a decision. I did this for kids at two different schools and they both gave additional FA, but one was about twice as much as the other.
Thanks for your replies. FAFSA was filed before the death. Worker’s comp award and life insurance have not yet been received as the tragedy was very recent. I guess the first step would be to find out if there is a deadline to appeal
Have them contact the school college ASAP. The school will understand…and will,tell,them how to proceed.
Since the workmans comp, and insurance haven’t been received yet…they won’t be included on the 2017-2018 fafsa in any way…as long as the appeal is made before these are in the family bank accounts.
If the workmans comp is received in 2017, it will be on the 2019-2020 financial aid forms.
Any assets are reported as of the day of filing the initial fafsa for that academic year.
The thing they need to ask for consideration of NOW is the reduction in income.
Does the college guarantee to meet full need for all students?
Thanks for your help @thumper. No the college does not meet full need.
moderators note
I am sorry for your loss, but please do not post questions for others. please have them establish a CC account, CC is more than willing to assist.