Deceased Parents, Financial Aid?

Paying for College
1

<p>Hello all this is my first-post. </p>

<p>This is my situation: </p>

<p>Both my parents passed away in 2003 in a car accident when I was 16. I am enrolling in community college this fall after a couple years out of school and I am very concerned with financial aid when I transfer to a four-year school. I guess my question is- What kind of package a student like me could expect from a college? </p>

<p>I am living with my older sister though I don't think she can claim me as a dependent. I work in retail and make about $16,000/year. I have assets totaling about $55,000 (from my parents' life insurance). </p>

<p>I'm very clueless and apprehensive, any answer will help. Thanks everyone.</p>

2

<p>FAFSA is an application for federal aid (Stafford loans, Pell grants, work study, etc). FAFSA is a computer program that looks at four factors: parent(s) income, student income, parent(s) assets, student assets, subtracts some standardized deductions and then calculates an EFC. Since you lost your parents at 16, I believe you will be treated as an independent student. </p>

<p>There are two alternative FAFSA calculations (the automatic zero EFC, and the simplified needs test). Generally whether these alternative calculations are used is dependent on parental AGI as reported on a federal tax return. </p>

<p>If the parents AGI (as reported on a federal tax return) is under 50K, and the parents file a short federal tax return (1040EZ/1040A), then two of the factors (parents assets, students assets) will be excluded from the FAFSA calculation. This is called the simplified needs test. If the parent files a short federal tax form and the parents AGI is under 20K, FAFSA will automatically set the EFC to 0 (the automatic zero) and all other inputted info on FAFSA will be ignored. </p>

<p>The question here however is whether either alternative FAFSA calculation applies to an independent student. (I assume you’re single and have no dependents).</p>

<p>An independent student qualifies for the simplified calculation if your AGI was less than 50K and you can file a short tax form. So, you should qualify and assuming the 55K is in some cash form (e.g., a CD), it will be off the table when your EFC is calculated. However if the money is in an asset like stock and you sell it in the tax year before you apply whether for gain or loss, I believe you have to report it on Schedule D 1040 (long form) which could put these assets back on the table. When I mean the tax year before you apply, in your OP, you said that you will be transferring in a couple of years, let say school year 2009/10. You don’t want to file a long form (1040) for tax year 2008.</p>

<p>Independent students with no dependents other than a spouse do not qualify for an automatic zero EFC.</p>

<p>As to a financial aid package, it can include money directly out of the school’s own pocket and from an outside source (e.g., fed govt). If the school can get money comes from the feds pocket, they will try to do so because it means less money out of their own pocket. Money obtained from the feds pocket will be based on the FAFSA calculation. If a financial aid package includes the schools own money, the school has discretion about all the reported FAFSA info even if the school only requires FAFSA.</p>

<p>Also keep in mind that schools may not meet your full need as calculated by FAFSA. Let say a school costs 20K and they give you a package (loans, grants, scholarships) of 18K. They haven’t met your full need and you’ll have to come up with 2K out of your own pocket. So your assets could come into play this way.</p>

<p>Good luck</p>

3

<p>I have a similar situation. My mother has recently passed and my father lives across the US and has never claimed me as a dependent. I am having trouble applying for financial aid. Because I am under 23 the state of California still thinks of me as a dependent. How do I register for FAFSA without having to put my father’s information down?
Thanks.</p>

4

<p>If your father is living but you do not have a relationship, you will have to request a dependency override from each school in order to file as an independent student. You would complete the FAFSA without parent info. It will keep asking you if you really want to do that. You will say yes. You will not get an official EFC. If the school does not grant a dependency override, you must get your father’s financial info & have him get a PIN to sign the FAFSA.</p>

<p>Were you in a legal guardianship situation when you turned 18 (or are you now, if not yet 18)? Or were you a ward of the court at any time after the age of 13, even for a day? These two situations make you automatically independent. Please see this list to determine if you are automatically independent for financial aid purposes: [FAFSA</a> - Free Application for Federal Student Aid](<a href=“http://www.fafsa.ed.gov/before015.htm]FAFSA”>http://www.fafsa.ed.gov/before015.htm).</p>

5

<p>I am so sorry to hear about these losses of parents.</p>

<p>Right now, I think your $55k in assets is rather unprotected - meaning that it would be expected to be used towards your education. However, if you bought a residence with the money, I think it would be protected.</p>

<p>Others can chime in here if I’m wrong.</p>

6

<p>The assets are protected if the OP does not have to file a 1040. </p>

<p>I am not sure I would tie up assets that might be needed for school & other expenses. Plus, purchasing a home entails many associated costs & if the market stays soft, it limits relocation for a future job.</p>

7

<p>The OP has earnings of $16k. Would that be low enough for his assets not to be considered?</p>

8

<p>Yes. The simplified needs test (which disregards assets) has an income cut off of $49,999. As long as the OP is eligible to file a 1040a or 1040ez he/she should be eligible for the simplified needs test. Independent students are not eligible for the automatic 0 unless they have a dependent other than a spouse, they are eligible for simplified needs test.</p>

<p>OP, kelsmom is a financial aid officer in real life so her advice is more accurate than the rest of us.</p>

9

<p>Ahhhh…</p>

<p>that’s good news!</p>

10

<p>Okay, I have a complex FAFSA question for you. (I think I’m screwed)</p>

<p>So I lost my job in 2008 and have not been able to find work in my field. I filed a 2008 tax return. My former employer postponed my payments for my contract until 2009. By the time I got paid for work that occurred in 2008 (they called it wages), I was flat broke and late on my bills to the tune of a huge amount of money.</p>

<p>Fast forward, 2009 came and went, no work for me or my spouse. I’ve decided to go back to law school. Unfortunately, my 2009 tax return is going to show $200k+ in “income” based on two people’s unemployment and my deferred exit package from 2008. </p>

<p>The amount of money in checking, savings, all assets is about $1000. </p>

<p>If I put in my 2009 taxes on FAFSA there is no way I’m going to get any aid because they’ll think I’m rolling in six figure income. Is there an alternative calculation that looks at whether I have assets and whether I have any actual wages?</p>

<p>Or am I totally screwed for getting aid until I wait to file 2010 taxes that show I earned nothing?</p>

11

<p>The assets you report are as of the day you file FAFSA. You will have to report the income as it is on your tax return. You can ask the school(s) for a special circumstances adjustment to reflect loss of income. It is at their discretion if they grant an adjustment. All you can do is ask. </p>

<p>If you are going to law school the only federal aid you would be eligible for is loans. Federal grants are for undergrad only (except for one, some sort of teaching certification I believe.)</p>

12

<p>i have this same problem. i am 18 years old my mother died in 1992 and my father in 2006 i have no job i stay with my father’s niece who has 5 kids on her own. how will i pay for college. i heard that their were scholarships for kids like me but i haven’t found any yet can you help me</p>

13

<p>Have you completed FAFSA? You will be independent for FAFSA so with no income you should be eligible for federal grants and loans. Those should be enough to cover the costs of a Community college.</p>

14

<p>latham, have a similar situation in that my husband died in 2008 but FAFSA require that I report his life insurance money as “investment assets” because I got like $30 worth of capital gains. It looks like I am wealthy when in reality I am far from that. Part of it is my “fault” since I am trying to invest the insurance money and not squander it so that it is gone in a year or two. I have been told to write a letter to the FA office and explain the situation. Maybe that could help you, too.</p>

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<p>latham, also be aware for many law schools which do give grant aid, you must provide your parents income & assets</p>

16

<p>okay mine is similar to the first question. i am 17 yrs old and my parents both died when i was 10. i now live with my aunt, she’s technically not my legal guardian she’s my guardian by law or court i guess you could say. But i’m not sure how college would work for me, money wise. Would i be covered? The money i get from my parents being deceased, i do not ever see it or hear about it so i’m not sure what my aunt does with it.</p>

17

<p>Please use old posts for information only. When posted on and revived, other members often don’t notice the date and respond to the OP.</p>

<p>Please use the New Thread button on this forum to start a thread to ask your question.</p>

<p>Closing.</p>