Help with CSS Profile

Paying for College
1

Newbie here. My oldest is applying to colleges right now. I’m in the midst of trying to fill out the CSS Profile. I’ve got a bunch of things going on that make things a bit more difficult.

First off my husband (Student’s father) passed away this year. So we are filling out forms with the 2022 taxes that show his income. And I’ve been told I will need to appeal the financial aid packages and use the death as a special circumstance. The CSS Profile seems to figure that out on its own because after putting combined income from 2022 taxes, they only ask me about my share of that income afterwards.

But I am worried because I received some life insurance and there are 2 spots I could put this - either under investments (I did invest it), and/or under untaxable income. I’m worried if I put it both places they will double count it. What do you think?

Under untaxable income I also need to include all of the survivor benefits from social security. It says to include all household members except college students. But since my oldest is still in high school I assume I need to include her parts. But I am not sure why I need to put down what her younger sibling gets? Surely he cant be expected to use his benefits for his sister’s tuition?

Lastly, how much will these things increase my amount I am expected to pay? I make under $60k/year and I’m living off these benefits to pay things my husbands salary used to cover - like utilities and the mortgage. I have some money in a HYSA to use in case of emergency (like household maintenance that I cannot cover with my paycheck) and to pay the mortgage each month. So I worry if I have some money sitting in a HYSA they will consider that as being free for college tuition. I’m wondering if I should give some of the money in my HYSA to my mom for a few months? to be fair she gave me the money to start with to help me out…but now I’m just worried that I will have to hand it off to colleges instead of using it for my emergency fund. I’m expecting to pay some, but I cant be blowing thru $30k/year for college tuition. I was hoping for more like $20k/year.

Anyways, any guidance would be appreciated.
Thank you!

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I am sorry for your loss.

I have dealt with some of these issues and have discussed them extensively with financial aid officers at several CSS Profile schools:

First off: for SS survivor benefits received by the parent for the applicant student (under age 18) should not be reported anywhere on the Profile. Note that the specific question asks for “Social Security benefits received for all family members, except any who will be enrolled in college in [upcoming college year], that were not reported on a tax return.”

Social Security survivor’s benefits should be reported on each child’s tax return. If they don’t have any other income, none of the Social Security Survivor’s benefits will be taxed (as their taxable income won’t reach the minimum threshold) and you wouldn’t have to file tax returns for them.

But for CSS Profile purposes, since this money is going to the parent on behalf of the younger sibling, it is treated as household income. But I would make clear in the supplemental notes that these benefits expire upon the younger sibling reaching age 18. As this is a temporary household income boost, FA offices are more likely to treat it at a discounted rate in the present.

Hope this helps! I will address other issues in which I have experience in upcoming posts once I look through my notes.

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It will be treated as assets (investments) and untaxed income (but only as income for a subsequent year’s filing because the Profile looks backward two years for income). Make note of this in your CSS Profile and request that the FA offices don’t “double-count” this one-time payout down the road. I have found that the FA officers were accommodating for a similar circumstance (retirements funds that couldn’t be transferred to another retirements account and had to be cashed out), and treated this solely as assets and not income.

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It will get assessed just like other parental assets at 5% per year under the Institutional Methodology (IM) using the CSS Profile. For example, for $30,000 in such an account, need-based aid per year would decline by $1,500. it is likely not worth it to try to move money around to try to dodge/shelter this. One thing that is key is to try to minimize student assets as these are assessed at a much higher rate than parental assets: 25% under the IM.

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So for the Social Security Survivor Benefits

I personally received about $6k paid to me in 2023 because I am caring for a child under the age of 16. I wont get this again because my son will turn 16 in 2024 and i only got it for a few months since I work and also have income.

My daughter (the one applying to college) has received (or will receive in 2023) $27,082.
My son also received $27,082 in 2023. He will continue getting this until June 2026.
It sounds like I only put my sons under the Untaxed Income and Benefits for 2023? Because every other place where it asks about social security benefits it says not to include the benefits for the college student. But its not completely clear.

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Deepest condolences on your loss.

@kelsmom may be able to offer additional guidance.

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My condolences, as well.

This link has information about completing the Profile: Completing the CSS Profile. Specifically, it says:

“If a parent receives Social Security survivor benefits for the child, do I include the Social Security payments as “untaxed income for the child” or where would that be input/does it need to be input?

Include them in the Social Security benefits section for whomever is the beneficiary of that specific payment.”

You don’t report any untaxed SS benefits on FAFSA, but I’m not sure for Profile. You could call a school & ask. You can include an explanation in the Profile, but I encourage you to contact your child’s top choice school to discuss. You will probably need to request professional judgment special circumstances reviews in order to properly reflect your current circumstances (particularly for FAFSA, which will include your spouse’s income), so you’ll end up working closely with the schools’ aid offices.

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So for the Student, they only ask about 2022 income, and about potential income in for the summer of 2024, and the school year of 2024-2025. There is no spot for her SS benefits in 2023. She will receive some SS benefits in 2024, but only for 5 months of the year, before the “summer” starts. So I suppose I just leave it out?

I had heard that I would need to contact each school’s financial aid office. I will have to explain to them about the FAFSA discrepency because of my husband’s death and how the income in 2023 will be drasticaly different.

I’m also hoping to explain that I cant blow my entire life insurance payout on college tuition for 2 kids. I need to live off that money until retirement and beyond. I’m expecting to use some of it for college, but hoping it will be to the tune of no more than 20k/year. Also since my husband had a much higher salary, he did the bulk of the retirement saving, so i need to save a decent amount of the life insurance to make up for that too.

I had read I should wait for the initial financial aid package to come in the mail before I appeal. Because then the school cant say they already took my circumstances into consideration. What do you think about that?

I wasnt sure what to put on the part where they ask you what you are going to contribute for the year. I want to be realistic, but not shoot myself in the foot. I put down $10k. That is 20% of my take home pay, so i’d definitely be digging into the money I have invested to pay that. When I fill out those calculators on schools websites they are putting it more at $20-$30k/year.

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Schools will typically have you wait until they’ve issued an acceptance to talk about special circumstances. Some will wait until late winter/early spring, but that is more common with state schools. There is no reason to wait to talk to them, though. Schools have policies that they follow when evaluating special circumstances, and I am not aware of schools that will skimp on aid for students who asked about special circumstances early. They usually can’t give you an adjusted package right away, but they can speak in general terms about how your situation might play out. It’s really important that your child not get their heart set on a school if you won’t be able to afford it - there are a lot of us on CC who will warn you to make sure your child has affordable schools that they would be willing to attend on their list - and that they understand that if a top choice school ends up being too expensive, they will need to choose a different school. They will be fine, and you will have protected your financial future.

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Yes. Leave out the 2023 income/benefits. Next year’s Profile will ask about 2023.

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We had special circumstances which we put into the box on the CSS Profile that asks about special circumstances. I’m pretty sure it was ignored. Then after acceptances, I submitted an appeal for a professional judgment review at several schools where my student was accepted, and they all came back with a new financial aid offer that was adjusted to take the special circumstance into account.

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Thanks. She has 1 affordable school. Our state university. She has a 4.27 unweighted GPA so I think she will get in? Also her dad, myself, her grandparents and all her aunts graduated from there…but of course that might not mean much. But all the other schools she is applying to are $$$$ like BU, BC, UChicago, Dartmouth, etc…so I guess we will see how it plays out. Alot of these places say if your family makes under a certain amount they give free tuition. Even the state school says free tuition for families making under $75k/year. She probably has about $100k in a 529 too, but some is owned by her father who passed away and I am not sure if I am listed on it. I dont know if that will come up in a financial search or whatever. I’m not really sure what I need to do to make that money accessible to her for college now that he has died. But most is in a separate 529 owned by my parents, so that will not come up at all. If she doesnt use it all then her brother can take whats left. I mean, I will be able to afford to send her somewhere. But I’d prefer to keep our costs at like $25k/year tops because i’d like to retire someday.

She doesnt really have her heart set on 1 specific place. Actually even if she goes to the state school, her boyfriend goes there and she’ll probably be happy.

Sounds like we will just wait for the acceptance letters and financial aid and then start appealing to let them know about the income discrepancies between 2022 taxes and now.

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Regarding the 529 plan in owned by her dad: please call the plan administrator and ask what they need to change the owner after death. The plan we use has the option to set up a successor owner. Perhaps that was done on this account? Or the administrator can work with you to make arrangements?

Best of luck…

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Thanks I will do that. I was kind of worried in the beginning that the money would be lost to the estate process and any debtors he had? Is there a chance of that? or would they still let it be used for education as it was intended since the student it was started for is still alive?

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OP- based on your last question to TdoesCollege, I’m worried you are not getting professional advice on settling your husband’s estate.

I know in the fog of grief, work, kids, putting one foot in front of the other, the idea of one more phone call must feel daunting. But there are some nuances (not scary and not complicated) to the estate process that really need a professional even if the actual estate is not that complex.

Money doesn’t get “lost” in the estate process (I assume you mean going through probate) but there are smarter ways to handle an asset and “less smart” ways.

My condolences to your entire family.

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One thing I can add as general advice in the estate process: to extent possible, make sure as little money as possible is distributed directly to the kids. This will be a double-whammy for financial aid purposes: “taxed” as income and assets at very high rates in determining need and ability to pay. Parental assets and income are treated much better in FA calculations.

And to the extent that any $ goes directly it to the kids, make sure you “shelter” that for FA purposes by putting it in Section 529 accounts—those are treated as parental assets.

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For FAFSA, yes, student-owned 529 accounts are treated as parental assets. For schools that base institutional need-based aid on Profile, it will depend on the policy at each individual school.

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Interesting! Do you have examples of Profile schools that don’t treat student-owned (or Guardianship) 529s as parental assets? And how is this information determined/extracted by them from a Profile application where the information is inputted as parental assets?

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The logical place to report a student-owned 529 account is under student investments, as instructed by the most recent FAFSA currently available (2023-2024), unless the student must report parental information, in which case a student-owned 529 is reported as a parental investment.

There is no similar exception in the Profile instructions, at least there wasn’t the last time I saw a Profile form, which was several years ago. (Unfortunately, Profile is not made readily available online like FAFSA.) If you know that the Profile has been updated to include such an instruction, you can do us all a favor by educating us. Otherwise, again, the logical place on Profile to report a student-owned 529 account is in the student asset section as a student investment, unless the Profile instructions now explicitly direct that a student-owned 529 should or can be reported as a parental asset. A student-owned 529 account is not parental property in the legal sense, and while in many cases it may be controlled by a parent until the student owner/beneficiary reaches the legal age of majority and assumes control, it does not have to be controlled by a parent up until that time. When I last saw Profile, the relevant question in the parent asset section was “what is the total current market value of your parents’ investments? Do not include your parents’ home, business, farm, real estate, or retirement plans.” A 529 account owned by the student is not a parental investment.

My examples of Profile schools that don’t (or didn’t) treat student-owned 529 accounts as parental assets is as dated as my actual exposure to a Profile form, so individual school financial aid policies may have changed in the interim. What I did back then was call financial aid offices and ask. The information won’t be found on a college’s financial aid web page. I was given some favorable and some not-so-favorable answers. I also made it clear in the Profile Explanations/Special Circumstances section that $XX of the amount reported on line XX as a student investment was held in a student-owned 529 account, so that every school was aware and had a chance to exercise professional judgment, if they were so inclined.

Bottom Line: just because FAFSA treats a student-owned 529 account as a parental asset (assuming parental information must be reported) for the allocation of federal aid, don’t assume that Profile schools in distributing institutional need-based aid will operate the same way.

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I don’t know where you are getting this information that a 529 would be reported as a student asset.

It would actually be a more rare situation for a student to own a 529 account. Typically they are set up as follows: “With an individual 529 plan, the owner is usually a parent or other adult who saves money on behalf of a chosen beneficiary, typically their child. The account owner makes contributions, makes investment decisions and also has the power to change the beneficiary as they see fit.”

A 529 can be set up as custodial account: “In a custodial 529 plan arrangement, the student is both the owner and the beneficiary. But when the student is a minor, an adult custodian must manage the account on their behalf.

This custodian can be a parent, grandparent or legal guardian. The custodian’s job is to manage the funds in the 529 plan on behalf of the beneficiary until they reach adulthood. In most states, that means age 18, though in some states the age threshold may be higher.

The custodian can’t change the beneficiary or account owner. Once the account owner/beneficiary becomes an adult, they assume control over the 529 plan.”

Quotes above from: 529 Plans: Custodial vs. Individual | SmartAsset

Typically, 529 plans are set up in the first way and the parent is the owner. The CSS Profile treats these as parental-owned assets.

I have experience with custodial 529 accounts too though…… and these are also treated as a parental asset, even after the student reaches the age of majority (and the account is under the student’s control with the student as the beneficiary). This “loophole” is a special case that only applies to Section 529 accounts and not to assets in other dispositions.

Here’s direct information about these in terms of FAFSA treatment of them. “Assets in a custodial 529 plan account owned by a dependent student are reported as parent assets on the student’s FAFSA. Generally, custodial 529 plans owned by a student’s sibling are not reported on the student’s FAFSA, since the sibling is the owner of the custodial 529 plan account. However, the CSS Profile requires students to report any assets owned by a sibling under age 19 and not yet in college, including 529 plans.”

I have confirmed this with multiple FA offices at multiple CSS Profile institutions in the past two years that they treat custodial 529 accounts the same way.

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