Are unpaid medical bills considered by my college's financial aid office?

Paying for College
1

<p>I'm in a bit of a dilemma here. I am going to be a sophomore at Rutgers University in New Jersey. My EFC for my FAFSA was 0 and I filed before the deadline. In March 2008, I received a letter from NJ's financial aid assistance program saying that my NJ eligibility index was 0 and so I received the highest possible amount of grants from NJ. The NJ eligibility index has the same purpose as the FAFSA's EFC.</p>

<p>However, in July, my financial aid counselor asked for my mother's bank and life insurance statements. She has about $60,000 in savings, but let me say up front that she does not plan to use this money to pay for my college tuition. </p>

<p>The first week of August, I received a letter from the NJ financial aid assistance program saying that my NJ eligibility index had now jumped to 3440 because my counselor reported my mother's savings and they deducted close to $2,000 from my grant.</p>

<p>Here's where things get difficult...</p>

<p>Do unpaid hospital bills qualify as unusual circumstances for college financial aid?</p>

<p>My father passed away 5 years ago from cancer and my mom hasn't paid off the bills from 2 hospitals yet. She has already paid off the bill for one other hospital. She has $0 income, but she does have about $60,000 in savings. She was not required to file a tax return for 2007. Some of these savings are from her life insurance and she has to pay a premium every year so she won't be taking that money out anytime soon. I am the main beneficiary so I will only get that money when she dies. </p>

<p>My mom tried to show my financial aid officer the hospital bills to prove that she couldn't use her savings to help me pay for college because there's still a lot to pay off for the hospitals, but my financial aid officer wouldn't even acknowledge the bills. If we do not pay off those bills, we risk getting sued.</p>

<p>Was the financial aid officer correct? I need to double check because my mom honestly cannot afford to pay for my college tuition with her savings.</p>

<p>What should I do? I have never been so scared about money in my life. I have not been able to sleep without waking up at least once every hour because that $2,000 would have made a big difference. I commute to school every day and I live a bit more than 50 miles away from Rutgers. I cannot dorm because I can't afford it. We are so poor that my mom cannot afford car insurance for me so she's the one who drives me to and from school everyday - that's over 100 miles. Gas is about $15 each day. Doesn't this demonstrate how needy my family is? Even if my mom has about $60,000 in savings, she cannot afford to use that to get me through college.</p>

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<p>Medical bills are in a kind of “no man’s land” for financial aid purposes. In most instances, the financial aid officer can use them to exercise professional judgment, but is under no obligation to do so. In your case, he didn’t.</p>

<p>However, you are asking about a specific New Jersey program. I don’t know enough about it to know if your financial aid officer is under some obligation to consider the bills. Your best bet would be to continue up the ladder in that agency, and perhaps consult with a Legal Aid attorney who could help you navigate the bureaucracy.</p>

<p>Good luck.</p>

3

<p>You really have more than just that question to answer – the FA officers are going to wonder why your mother has such significant savings (I am assuming it is not in a retirement account) and has not paid off the hospital bills. I know at my school, they will take into account unpaid medical bills, funeral expenses and credit card bills used for living expenses during a time of unemployment – but not if you have savings that could be used to pay them off. This is where that “professional judgement” comes into play. The assets would be lower and your mom would have no bills if she used savings to pay them off. </p>

<p>If you mother is planning on using that savings for living expenses for several years (and it won’t last that long) they will wonder why she doesn’t get a job, etc. </p>

<p>Are you already including money from work-study and summer earnings in your income for school – or could that help you out?</p>

4

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<p>This doesn’t matter to the financial aid folks. What matters is that she HAS the money…and therefore, they have determined that it is available. </p>

<p>Agreed with others…contact others in the finaid office. If possible, go in person and take all the documentation that you can gather to support your situation. As mentioned above, the financial aid officer determines how this will be dealt with. </p>

<p>Agreed with hsmom…there are a lot of unanswered questions the financial aid office will want answered.</p>

5

<p>You should read the book How to Pay for College Without Going Broke.</p>

<p>The #1 lesson from that book is to pay all outstanding and expected major bills and expenses with any savings you have before filing your FAFSA.</p>

<p>In other words, if you need to reroof the house, or pay medical bills, or even if you can pay off the car loan, you are better off doing that than having a bunch of money sitting around in a savings account. Because every dollar you have in savings counts towards EFC.</p>

<p>As with hsmomstf, what I don’t really understand is why your mother has this money but hasn’t paid off the bills. If she’s going to use the money to pay the bills, why hasn’t she done it yet?</p>

<p>I know either FAFSA or Profile asks about expected annual medical expenses not paid for by insurance. Each year I estimate what I think we’ll pay and put that down. If I was planning to pay off old hospital bills, I’d put that down.</p>

6

<p>I had the same question about paying off the bills. If they are five years old and not paid, it’s hard to accept the explanation that money in savings must be used to pay the bills. That said, I can well understand why your mother would want to keep that money in the bank regardless… paying the hospital bills just isn’t a very logical reason to give since five years later they remain unpaid.</p>

<p>$2000 is a lot of money for you to come up with, but not a staggering amount. Is there a way you can work a little extra over summers or the school year? Even if you can’t make the whole amount, whatever amount is still needed perhaps you could add to loans you’ll already be taking out. It wouldn’t be that much more and would be well worth the college education.</p>

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<p>Most of the $60,000 my mother has in savings are from her life insurance which she cannot take out because that money goes to me only if she dies.</p>

<p>My mom’s insurance company told my mom not to pay the hospital bills until the hospital has given a detailed record of what the expenses were for. The insurance company warned that many times, the hospital will fudge the records to overcharge us. My mom’s lawyer has recently began re-evaluating the charges with the hospital’s lawyers and biling staff.</p>

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<p>I forgot to mention that my mother does not speak English. The highest level of education she has received was grade-school so it’s hard for her to get an entry-level job.</p>

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<p>Last summer, I made $1,563 from two jobs. I was found not to be eligible for work-study this year.</p>

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<p>what is the cost of attendance for your school.</p>

<p>You mentioned that you are a commuter student. Since you have a unique situation maybe the school could include your high transportation costs (say $60 a week * 30 weeks is 1800) in the Cost of attendance and you would be eligible for more aid (if you haven’t already maxed out your pell grant, perkins and stafford loans). Maybe that could get some work study money for you</p>

<p>Also you say that your mother has $60K in life insurance she can’t take out. Are you referring to money that she received from your father’s death or are you referring to a whole life policy on your mother’s life that has ‘cash value’?</p>

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<p>“Most of the $60,000 my mother has in savings are from her life insurance which she cannot take out because that money goes to me only if she dies.”</p>

<p>I don’t understand this. Do you mean your mother owns a life insurance policy worth close to $60,000 at her death? How would that money be in a savings account to begin with? Or do you mean she has money from your father’s life insurance that she wants to pass on to you and she’s keeping that money in a savings account?</p>

<p>There are life insurance policies where you build up a sum of money over time and you can draw on it if needed. My husband’s mother took out some kind of life insurance policy that would benefit him, but when she needed money in her old age she drained it of all its value. (Which was fine, she needed the money.) But if it’s that kind of policy, and the money will eventually be for you anyway, then have her take it out now and give it to you incrementally as needed to make ends meet for your college education.</p>

<p>With you mother’s limited English, are you sure she’s getting correct information about the availability of that asset?</p>

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<p>To sueinphilly:</p>

<p>The cost of tuition for two semesters is $11,559.50 including the campus fee, the school fee, the computer fee and other fees that Rutgers charges. </p>

<p>Regrding the $60,000… when my father passed away, my mom got about $40,000 from his life insurance (I’m looking at a statement and it says his policy type was ACCID DEATH & DISMEM). $10,000 of the $60,000 is the cash value of my mom’s own life insurance policy. This is the money where I am the beneficiary and I will only receive when she dies. She won’t be using that money for anything other than to help me financially when she dies.</p>

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<p>I’m sorry. I need to clear something up. $40,000 was from my father’s life insurance. $10,000 is from my mom’s life insurance policy that will be passed along to me when she dies. The rest of the money is from her savings accounts. However, my school refers to the $60,000 collectively as my mom’s net assets even though $10,000 cannot be taken out.</p>

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<p>My sister is an immigration lawyer and she is the one who usually translates for my mom about the insurance policies because she’s more knowledgable about these things. </p>

<p>One more thing… last year, my mom reported assets of $23,000. This year, she reported assets of $60,000. Somehow, the NJ Assistance Authority carried over the $23,000 from last year and added it to $60,000. I called them today and they said they do this every year and will continue to do so every year. Why would it carry over? $60,000 is the current balance of her assets. Why would they carry over??</p>

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<p>I get more confused the more you tell us, gardeniagnome. If your mom has 0 income, how did her assets grow from $23,000 to $60,000 in one year?</p>

<p>I can’t speak to the carry-over issue, but your mother is getting money from somewhere. It sounds to me like either you, your mother, the financial aid counselor, or all of you are not looking at the same total picture regarding assets and income.</p>

<p>I think you should appeal whatever determinations you think are unfair, but my guess is that one way or the other they will expect your mother to contribute some portion of those growing assets to your education. She may not feel able to do that for whatever reasons, but that doesn’t mean the financial aid office will agree with her reasons.</p>

<p>Since your sister has a professional job could she pitch in a little to help you out?</p>

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<p>Last year, the financial aid office only asked for specifically my mom’s checking/savings account balances. They did not want to know about the life insurance policies. They say that this year, because the economy is so weak, they are squeezing every last drop out of the students.</p>

17

<p>Oh, I see. </p>

<p>I think the carryover part doesn’t make any sense though, and should be able to be challenged if they’re counting the same $23,000 dollars twice.</p>

<p>I think you’ll be able to piece this altogether though. The extra $2000. will certainly be a hardship you didn’t need… but it shouldn’t endanger your ability to complete college, even if you have to borrow a bit more.</p>

<p>Sorry it’s not working out better for you though. I hope there is some improvement in your financial aid situation in the not-too-distant future.</p>

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<p>Thank you for your advice and well wishes. Starting in the next two weeks, I will be working two part-time jobs and getting little sleep as a result. One job is during the afternoon-evening whenever I don’t have classes and the other is overnight at a 24hr CVS/pharmacy. Oh man, I hope I don’t die of sleep deprivation.</p>

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<p>what exactly DID Rutgers offer you? what is your EFC.</p>

<p>The max stafford loan is 6500 (2000 of which is unsubsidized) and the Pell grant could be several thousand more. That could nearly cover the cost. </p>

<p>If your sister is an immigration lawyer, surely she has a few $$ she can help you with</p>

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<p>OK…I’m confused. You said in your OP that your mom had $60K in savings…and later said that was a payout from a life insurance policy. If the money is in SAVINGS it is considered an asset. It really doesn’t matter where it comes from. </p>

<p>In addition, you mention that the $60k is “life insurance and you won’t get it until your mom dies”. This doesn’t make sense if the money is IN a savings account accessible to your mom. If she has made a decision to will that savings to you when she dies, that is very different than having an insurance policy to which you are a beneficiary…Which is it?</p>

<p>Colleges do NOT look at values of life insurance policies that have NOT been cashed out (as in when the policy holder dies). Many, many folks have term life insurance policies through their employers and these are NOT listed anywhere on any financial aid form…no where.</p>

<p>I thought your mom got a $60k life insurance payment and that the money is now in savings. Please clarify.</p>