<p>I've tried searching for my answers and nothing definitive. Our situation is pretty grim. Daughter in her first year at a state school. She qualifies for full coverage due to our low income status. We sold a piece of property recently and have netted about $30000. That is it for total savings, assets, everything. My husband has become ill and we do not know how long he'll be with us. We do have another daughter who is a junior in high school.</p>
<p>Questions:</p>
<p>How much in assets are protected (not the best word but my brain in mush) from financial aid calculations? How much can a student hold in assets before 20% is tapped?</p>
<p>Is life insurance payout considered an asset? </p>
<p>If your AGI on your tax return is below a certain amount ($49,999) and you file a 1040ez or 1040a you may qualify for the simplified needs test where assets (student or parent) are not considered at all. If your AGI is below $19,999 and file 1040ez/1040a you may qualify for the automatice zero EFC. (see pages 4 & 5 of the above link). </p>
<p>A Life insurance pay out is generally treated as income (untaxed I think) in the year it is paid then money remaining in the bank is treated as an asset. There is a discussion on finaid about whether a financial aid officer can make a spacial circumstances adjustment for this here <a href="http://www.finaid.org/educators/pj/lifeinsurance.phtml%5B/url%5D">http://www.finaid.org/educators/pj/lifeinsurance.phtml</a>
If your AGI is below $20,000 and the life insurance pay out is not taxable then the life insurance pay out may not affect your income as the formula looks at AGI to make the decision about whether you qualify for the automatic zero EFC.</p>
<p>If the AGI is low enough ($49,999) and all other criteria are met for simplified needs formula then the life insurance money would be ignored as an asset but would probably be treated as income. </p>
<p>Financial aid officers can make adjustments based on things such as loss of income and excessive medical expenses. Next year, after you file FAFSA, make an appointment with the financial aid officer to see if an adjustment can be made due to loss of income from your DH being unable to work and for any medical expenses etc. Finaid has a discusssion about some of the circumstances for which a school is allowed to make special circumstances adjustments
<a href="http://www.finaid.org/educators/pj/specialcircumstances.phtml%5B/url%5D">http://www.finaid.org/educators/pj/specialcircumstances.phtml</a></p>
<p>The above figures are based on 2007-2008 rules - there is a bill awaiting the Presidents signature that will change some things for 2008-2009 school year and subsequent years.</p>
<p>I hope things turn out well for you. Good luck.</p>
<p>After 30 years in the business, I can tell you that life in. proceeds are income tax free - period. If you're over the asset protection allowance, there are financial vehicles (including a small business if you own one) where assets can be legally repositioned and excluded from the calculations.</p>
<p>Momray wrote: We sold a piece of property recently and have netted about $30000. That is it for total savings, assets, everything.</p>
<p>Swimcatsmom wrote:If your AGI on your tax return is below a certain amount ($49,999) and you file a 1040ez or 1040a you may qualify for the simplified needs test where assets (student or parent) are not considered at all</p>
<p>I write: You should check this carefully. I believe that if you have capital gains - which I assume that your "net 30,000" probably is - that that makes you NOT eligable to file a 1040ez or 1049a, because there is nowhere to report capital gains to my knowledge. Your tax preparer should be able to clarify this very easily.</p>
<p>I have a friend who would could have qualified for zero efc because her income was below 20,000, but couldn't because of her $200 capital gain for stock she received as a gift and sold to help make ends meet. The person who gives her this stock now sells it himself and gives her the proceeds to avoid this issue.</p>
<p>Just to clarify, I think swimcatsmom is right IF you are able to file 1040ez or 1040a. Very good advice in that situation. She is usually filled with very good advice - and thanks for it :).</p>
<p>If a child in your house receives free/reduced lunch, you can also qualify for the Simpified Needs Test (even though you are unable to file 1040EZ or 1040A)</p>
<p>"netted about $30000. That is it for total savings, assets, everything."</p>
<p>For a two parent household, the asset protection will generally be well above 30K, so these assets shouldn't result in an increase in EFC for FAFSA purposes.</p>
<p>"Will 6 figure yearly income and 7 figure net assets effectively preclude any financial aid, except for possibly loans ?"</p>
<p>Probably. But best to use the FinAid calculator to predict your EFC for both Federal and Institutional methodologies. Some families with income in above $100K and modest assets can still expect to see some need-based aid, but if the 7 figure assets are reportable (ie, not home equity or retirement vehicles) you're pretty much guaranteed an EFC that will exceed the cost of all colleges.</p>
<blockquote>
<p>Will 6 figure yearly income and 7 figure net assets effectively preclude any financial aid, except for possibly loans ?>></p>
</blockquote>
<br>
<p>yes...unless the student's school awards merit aid that does not consider financial need...and that student is awarded merit aid.</p>
<p>I checked with a few of the schools...they said that one need not apply for financial aid to be eligible for merit schol. $$. I wonder if same applies to ALL schools ? I guess I'll make some calls.</p>
<p>It doesn't. I can tell you that at least one school (Brandeis) requires the FA application for merit scholarships.
[quote]
To be considered for a scholarship, a student must submit the CSS/PROFILE, available at <a href="http://www.CollegeBoard.com%5B/url%5D">www.CollegeBoard.com</a>. Even those students from families with strong financial resources are encouraged to file the CSS/PROFILE; many scholarship holders at Brandeis report family incomes of $100,000 or more.
<p>MBJ...Boston University requires students to complete all of the finaid forms for both MERIT and need based aid. There were a few very highly selective scholarships that had separate applications that did not require the completion of the finaid forms....but most of the merit awards required them. And the forms were also required for renewal until DS was a junior. So...to answer your question...you need to call each school to find out if they require the finaid forms even for merit aid. SOME DO!!!!</p>
<p>I believes Scripps requires the need based application for merit based aid. The presenter said the gov't doesn't say what the ceiling is (I've forgotten what the ceiling refers to, but it's related to income), so submitting the form covers the bases.</p>