<p>Question: We are not a wealthy family and should ordinarily qualify for a lot of need-based financial aid, but we recently came into an inheritance of over $200,000. This is a one-time thing and, although were very grateful for the extra money, were afraid that it could have a huge impact on our sons college [...]</p>
<p>Good advice Sally as far as it went, but I think it would be helpful for the person who asked that question if you could have gone into a bit more detail about just exactly what the effect of $200,000 in the bank would be in the family’s Expected Family Contribution (EFC) as determined by the FAFSA. Since each institution that uses the CSS Profile adjusts that formula differently, it is much harder to predict what effect this kind of money could have on what the family could be expected to pay.</p>
<p>If the family’s income situation is such that they qualify for the “simplified needs test”, the money wouldn’t affect the EFC at all. If the family doesn’t qualify for that, roughly 5.6% of the $200,000 would be included in the EFC - or something in the range of $11,200. This might not be such a deal or budget breaker for the parents. Any amount that has been invested in a retirement fund (IRA, 401k, Keough, annuity, etc.) is invisible to FAFSA. Some of those investment vehicles would permit access to the money for educational purposes, some wouldn’t.</p>
<p>I’d advise this family to print out the current version of the FAFSA formula <a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf</a> and then work through several possible scenarios on paper. But they also need to know that very few colleges and universities guarantee to meet full need. They may be very glad that this windfall arrived just before the son heads off to college!</p>
<p>EXCELLENT points from from happymomof1, especially about the Simplified Needs. For families with household income under $50K, assets become irrelevant. For those who are close to that cut-off but have higher assets, that’s definitely something to think about when making work-schedule plans. </p>
<p>The family that sent the question seems to be aiming for colleges that do meet 100% of need, but for those schools that don’t, the inheritance money could be an important way to bridge the “gap” if the college doesn’t offer adequate grant and loan, so it wouldn’t be wise to tie it all up in “investments.”</p>