<p>OK…I’ve read it all again and I’m very confused. </p>
<p>But the one thing I have to agree on is that the information you are reporting is not being viewed the same way by all. You need to review ALL of your finaid application forms (FAFSA and anything that your school requires in addition) to make sure that you are reporting this all correctly.</p>
<p>My guess is that the $10K (if it is IN a life insurance policy) should not be reported as an asset. The $40K that your mom HAS in savings is an asset. BUT since I’m not clear about the specifics of these accounts, you need to deal with someone in finaid who IS!! Take the account books or policies with you when you go to talk to them and they can perhaps help you determine where you need to include info and where you don’t.</p>
<p>Also, keep in mind that an income of $0 does beg the question “how are you paying your bills?”. Colleges wonder where the money is coming from to make everyday payments of things like rent, utilities, food, clothing…never mind college. Even with an EFC of $0, your family has to be getting money from somewhere to pay the bills. Perhaps this is the red flag that the college saw…don’t know…but it’s an idea. You may need to explain just how your family is paying their bills…and remember that if they are getting money from somewhere else to do so, that IS something that gets reported on the FAFSA.</p>
<p>In the meantime, good luck with your jobs. You might want to pick up mowing lawns, babysitting, etc that can be done in “off times” to earn some more cash.</p>
<p>I do not know anything about the NJ program, but FAFSA specifically does not include the cash value of your mom’s life insurance.</p>
<p>Why is it taking 5 years to get the billing clarified and paid. Maybe you should take a year off and let your mom pay the medical bills then reapply.</p>
<p>Can you find some one in NJ who knows the system who can advise you?</p>
I am very confused about all this also. The $40,000 that was paid to your Mom from your Dad’s life insurance policy is an asset and should have been reported as such on FAFSA last year as well as this year. FAFSA asks for checking/savings/investments. If the insurance had already been paid to your Mom it is and was an asset. There is not an option to exclude it on FAFSA. But if your Mom’s income is 0 I would expect your FAFSA EFC to be 0 as the simplified needs test would mean assets would not be taken into consideration for FAFSA EFC which would make you eligible for the Pell grant and work study and loans. </p>
<p>And as somemom said - the cash value of a life insurance policy is not reported on FAFSA.</p>
<p>And the carryover of assets makes no sense at all.</p>
<p>Do you have an English speaking adult/family friend that can go over all this with you and make sure you are reporting everything correctly?</p>
<p>My mom received $40,000 after my dad died. That money is still held by SBLI. It is not in my bank, but I spoke to my financial aid counselor again and she told me that those are considered assets. The $10,000 is IN a life insurance policy. Because there was interest from this policy, it was listed on my mom’s federal tax returns and that was why the financial aid factored that money into my mother’s assets. The financial aid counselor said there is nothing else she can do for me. They won’t consider the hospital bills or the fact that I have to travel more than 100 miles a day.</p>
<p>I guess this is the end of the road for me, but thanks so much for everyone’s replies. Now that I know that I will definitely not be able to do anything about additional grants, I can relax. IF there’s nothing I can do, there’s nothing I can do.</p>
<p>The problem with insurance payouts, pension payouts, any payouts is that they are often assessed as income the year they are received AND as assets if they are sitting in an account at the end of the year. Planning for financial aid is to make sure that the income is offset by things like medical expenses so that you can show that the money went for the necessity. The fact that you intend to pay medical bills or are keeping the money for a necessary future medical expense is not in the picture. That you cannot hold money when you are on government assistance is a pretty hard and fast rule for medicaid, welfare, SSI, etc, etc. If you are getting financial aid, you cannot have money. You have to deplete your resources first.</p>
<p>I work in the insurance industry, a “normal” life insurance policy with cash value should not be reporting interest on a tax return, unless your mom has accessed the cash value, the policy is a MEC, etc. So, this is a very unusual situation.</p>
<p>I am not sure what occurred to allow your mom to receive taxable interest, is it an annuity that she is taking income from?</p>
<p>Her statement says that the dividend option is accumulation with interest. Guaranteed cash value is $10,000. Type: Whole Life. She gets a statement once a year after she pays a premium. Does that help?</p>
<p>I am not a life insurance expert, so this is my opinion only. You need to check this. It is my understanding that the cash VALUE of a life insurance policy is NOT an asset on the FAFSA unless the party has RECEIVED some of the money from that policy. Does your mom receive a payment from her life insurance policy? If so, THAT amount would be reportable somewhere, perhaps as other income. We get a small minimum draw on an annuity and that IS reported on our taxes and therefore the FAFSA, but the whole value of the policy…well in excess of $10K you are reporting, is NOT…because we don’t have it. And yes, we get a 1098I for this policy because it draws interest, and yes, the interest is reported…but NOT the value of the monies we have not accessed. We specifically checked into this and were told this was accurate. Our annuity is a retirement annuity and we have to take a minimum draw on it because we inherited it from someone who was taking a minimum draw. BUT the total value of the annuity is not considered an asset…and we have never contributed to it.</p>
<p>The $40K your mom received in life insurance after your dad’s death IS considered an asset if it is sitting in a bank account.</p>
<p>But I ask again…How are you paying to live? That is probably the question that is tripping this review by financial aid.</p>
<p>Does your mother qualify for the simplified needs test? Did she receive any proceed from insurance this year? What is her income? $60k in assets is not going to be an issue if her income if very low as there are income exclusions and even then it comes down to about only about $3K in EFC with the $60 figure.</p>
<p>To thumper: No, my mother does not receive any payments from her life insurance policy. The interest from SBLI stays in her account each year, untouched. My mom received Social Security Benefits. I stopped receiving them last year when I turned 18. That was how we got by. </p>
<p>To cpt: Yes, my mom qualifies for the simplified needs test, but that’s only for federal financial aid. This is the New Jersey Tuition Aid Grant that they have taken away $2,000 from.</p>
<p>I think you need to get info from someone in the “know” about how to report this life insurance (the $10K). Seems to me that the MOST that would be reportable on your taxes is the interest, but not the value of the policy..IF your mom received none of that value. You have to be sure of that. But you need to check with someone.</p>
<p>Re: the $40K…it’s an asset. No way around that. Could your mom use part of that to offset the $2000 shortfall?</p>
<p>But the $40K is only going to be assessed about 5.6% which is about $2K, and that is not counting the asset allowance given. I agree with Thumper that you need to sit down and have someone go over how the insurance can be assessed. I know that my mother has a paid policy that pays her dividends each year that is income that she cannot cash in. It is part of the deal that my late father bought into when he bought the insurance policy. She got the proceeds upon death, and gets dividends each year, depending on the worth of the company. So I guess, working backwards, there is an asset value to report as well, but the real hit would be the those actual dividend paid. If you get $1000 a year, that would work out to a $20K asset at 5%, which means you get assessed on the income for EFC and the asset. Umm, I guess I see how that can work. But do see someone who can explain this to you.</p>
<p>You really need to find out the specifics about your policy. Seems to me your mom would need to declare any dividends she receives…as they are “other income”. I’m not sure about the asset value as it may not be something she has access to until she is over 59 1/2. You need to figure out what kind of account this is, and why the total value is being assessed.</p>
<p>Let me see if we are all understanding the financial situation regarding your aid. You have a FAFSA EFC of $0 due to low income and the simplified needs test – that makes total sense. NJ has a separate method of calculating EFC for the purpose of awarding NJ grants and aid. The NJ EFC is $3440 – primarily due to the amount your mother has in savings. The cost of your school (tuition, required fees) is $11,000+.</p>
<p>You should qualify for $4310 Pell Grant and $5500 in Stafford Loans for a total of $9810. You would also be eligible for federal work-study and a Perkins loan. Additionally, depending on your high school background, you might be eligible for the Academic Competitiveness Grant if you are a freshman or sophomore. Does your aid package include these amounts?</p>
<p>I got the full Pell Grant, but the school didn’t find me eligible for work study or a Perkins Loan. I was also eligible for the Academic Competitiveness Grant. I had already declined my Stafford loan in late July before I found out that they would be deducting $2000 from my TAG award. With the $2000, I would have been fine. </p>
<p>The HESAA agent I had spoken to told me to send in documents of my mother’s 07 tax returns, checking/savings account statement as of the date I filed my FAFSA, and a cover letter explaining why I believe they should not have carried over my mother’s assets from last year. They simply said it was HESAA’s policy to carry over year after year. I know a few other students whom they have done this too and they are equally aggravated. I don’t understand what the point is unless they are trying to give us less and less aid every year.</p>
<p>As for my mom’s dividends, she has her accountant do her tax returns for her. He has done them for her for the last 20 years or so. I’ll have to give him a call about the dividends. Thanks for your help, everyone.</p>
<p>first of all, with a FAFSA EFC of $0, you should qualify for federal work-study. Did you decline work-study or check the box that said you didn’t want it? I would ask them to tell you why you don’t qualify. Of course, being eligible doesn’t guarantee you a job – but you should at least be eligible. It shouldn’t be connected to the NJ readjusted EFC. The program is federally funded. Ask for very specific info on why you would not qualify.</p>
<p>second – the Stafford loan amount is driven entirely by the FAFSA EFC and those funds are definitely still available (as swimcastmom said). If you want to borrow that money (all or just a part of it) just call the office and ask them what you need to do to borrow the money. The amounts you are allowed to borrow depend on your statud (independent or dependent) and your year in school.</p>
<p>Freshman: $5500
Sophomore: $6500
Junior and above: $7500</p>
<p>I did not decline work study. The financial aid office told me that they ran out of work-study funds already. I know a few other students who are bummed out too because they don’t qualify either. I had no trouble at all with financial aid last year. I don’t know what’s going on this year.</p>
<p>garden…did you apply for financial aid on the “late side”. Things like Perkins loans are limited in amount and are dispersed on a first come basis at many places. Keep asking about work-study. Often, students decline it at the last minute and other students can then receive it.</p>
<p>In addition, if you could work a work study job, is the the potential for working an “off campus” job for the same amount of time? Or does your college have jobs that are college jobs but not funded by work study funds? Ask these questions too. DD had a small work study award one year, but her job allowed her to continue with university funds once the work study amount ran out.</p>
<p>Another possibility could be that they favor freshman when awarding Perkins loans and work-study eligibility – that way they can get them to enroll that first year.</p>