FAFSA Confusion/Concern

Paying for College
1

Right to the point, kinda.

I am currently attending an out-of-state University with a yearly tuition of $30,563.

My parents are divorced, my Father, who remarried makes roughly $300,000 a year before taxes, his wife (step-mom) makes around 400k, i am not sure the exact amount but it is significantly higher than my Father’s. In my parents divorce, my Father had to give away 67% of his salary, pension, etc etc. In part, take on all my Mothers debt 200k+, plus 100k+ in lawyers. Which I know FAFSA does not account for this. I do not know if they file jointly since she is foreign and all plus they have a prenup and everything. They do share a bank account but I’m not positive about anything else. I live with him whenever i’m home from school so 100% of the time since he has full custody. But the financial contributions compared to my mother are very different in the past year.

Regardless of my step-mom’s and father’s income, they are unable to pay for my college financially due to a variety of financial situations that arose from the divorce and among other things. (Also, my brother who is currently on the 5 year plan in his 4 1/2 year, has around 90k in parent loans- taken out by my Step-Mom)

My Mother who has been unemployed for 15 years with an income of about $110,000, her parents passed away leaving a substantial amount of money that is controlled by her brother, she does not have direct access to any of the money in the account (In a trust). My entire freshman year was paid by her, this includes books, tutoring, tuition (from the account- has no direct access to). After years of huge legal troubles with 10s of thousands of dollars having to be spent to get her out of it. (60k rehab, bail, her car (43k), stupid legal expenses) In all, now their is not as much money because of the huge withdrawals. The money was meant to last so that 100% of my education was to be paid for.

The situation has changed over the past few months, money is running out and have been told that I would be needing to apply for financial aid. It would be pointless for me to apply with my Father from his income. My Mother who has contributed but from a trust-fund account not controlled by her, with no direct access to it. She contributed the past year about $38,000+. My father paid for my flights home so around $1,500 in total, put money in my bank account here and there. But from that my Mother has contributed the most financially.

She lives in a town next to me, since she contributed much more than my Father financially, is it at all possible for me to put her down on FAFSA? Keeping my address the same, since that be fraud and can raise red flags if I suddenly change it. Since she makes significantly less, I am more likely to receive more and that she has not had a job for a number of years.

I do not want to get in trouble, I would just like to be able to go to school and graduate with the least debt possible, as most students want.

2

ETA…what has happened since November when you posted that money was NOT an issue and the trust fund was paying your bills?

Do you live more with your mom or dad? And if you live with neither right now…who did you live with most when you last lived with a parent?

If you lived 51% of the time with your mom, she is your custodial parent for FAFSA purposes. Only her income and assets are listed.

If you lived more with your dad, then he is your custodial parent…and he and his wife would be listed on your FAFSA.

Any money paid to your mom in spousal support must be listed on the FAFSA.

If you lived more with your dad in the year prior to your FAFSA filing date.and it sounds like that is the case…you really must put him as your custodial parent on the FAFSA form.

The big question is…will this trust fund of your mom’s be able to continue to fund your college education? Get the answer to that question.

If you need to list your dad and step mom, with incomes that total $700,000 a year, you are not going to be in line for need based aid.

3

1st question, my Mother got into legal issues that required a lot of money to be withdrawn out of the account. From what I have been told by my Father, it was a pretty costly screw up. Around 100k. I did not know any of this occurred until the beginning of December. Also, she is supposed to be able to live off the money for the rest of her life, since it is nearly impossible for her to get a job due to her criminal record (DWI & DUI). Today, I was told by my Uncle (her brother) that I need to as of my sophomore year to apply for Financial Aid because their is not as much money in the trust fund as planned due to the numerous f**k ups my Mother made. Knowing her it will most likely occur again. So now, money is a concern. My Uncle I think is trying to prepare for the worst, since if I get something from Financial Aid, more money will be available for the year after. Also, he is very good in investing which is why their was so much, but it seems that you can only do so much.

The trust and my Father’s pension is not the only financial support she has. She has numerous retirement stocks from her previous jobs. The only reason I know half of this is because my parents involved me and my siblings way too much in their divorce.

2nd question, I live with my Father pretty much 100% of the time, I never sleep at my Mother’s. I regretted the one time I did.

3rd question, Yes, the money is able to continue to pay for my college education, but only if I get some financial help. Aka FAFSA, if it comes to it I know I will have to take out student loans. Also, their is enough that my sister’s college education will be taken care (in-state). So around 19k-24k.

My Mother’s financial situation is much better in helping me, receiving some financial help using FAFSA compared to my Father and Step-Mom’s. Which I rather have her fill it out than anyone else.

4

In addition, it was not as much money as i thought it to be. I just knew my grandparents were fairly well off, never really had a issue with money. Years of my Mom’s huge and expensive mistakes have all added up to very high numbers.

edited for language
ED
Mod

5

If your school’s is a FAFSA only school, you need to file with your father’s information. Your mother, her assets, her family trust are not yours.

If your school is also a CSS/Profile school, then you either need to ask for a NCP waiver, or you need to report her income. It sounds like she doesn’t have income, so that’s what she’d report.

Honestly, it doesn’t sound like you are going to qualify for need based financial aid if your father makes $300k/yr. FAFSA doesn’t care that your father has a prenup, that he has bills from his marriage to your mother, that the stepmother isn’t a US citizen.

6

If you live 100% of the time with your father and stepmother,…then your father is your custodial parent whether you want him to be…or not.

So you must list him…and his wife…on your FAFSA form.

By filing a FAFSA, you will be able to get a $6500 Direct Loan.

To be honest, with all of your mom’s unearned income, I’m not sure you would get more aid with her as yoir custodial parent.

And lastly…you do know that most colleges do NOT meet full financial need for all students anyway. Your OOS school costs $35000 or so. I doubt that the school meets full need at all. You might not get any aid above the Direct loan anyway.

7

Sorry to hear about your situation. I am curious: How could your uncle control the entire trust? As a trust executor isn’t he supposed to distribute the trust amount that your mom is entitled to receive?

8

I am not sure how my grandfather setup the trust but I think it’s setup as an investment account of some sort because my Uncle has to sell a certain amount of stocks or something before anything can be paid for. My grandfather set it up so my Uncle was the trustee because he knew she would not be able to handle the money in a manner that wouldn’t result in their being nothing left within a couple of years. Also, from a quick internet search it may be a revocable trust, which allows him to change the terms of it at any point to what he wants. Irrevocable trust is where to change the details of the trust, my mother (beneficiary) would have to approve the changes before anything is done. It’s all through Bank of America’s Wealth Management branch Merrill Lynch.

9

And thank you guys for the responses above. I wasn’t sure what I had to do. Student loans it is then.

10

Ask your stepmother and your uncle to help if possible. Loan is really bad.

11

I think the student is planning to take the $6500 Direct Loan. That is all he can take without a cosigner.

I agree…discuss this with your uncle.

And also discuss college,with your dad. Maybe he can help out too.

12

It all depends on what the terms of the trust are. Maybe the trust document says that distributions to the beneficiary (mom) are at the discretion of the trustee (uncle).

13

If the tuition of this school is $30k, the COA must be $40k+ because it’s OOS. How much debt were you thinking of acquiring? I don’t think you can borrow more than $6500 without a cosigner. I hope you’re not thinking of taking on $100k+ worth of loans. Better to transfer somewhere in state than come out of college with that kind of debt burden.