A few years ago I was in a car accident and I received a 110k settlement for the damage. On my 18th birthday I received my first lump sum of 15k and now have 15k in my checking account. I want to know how I can minimize the impact of this money on my fafsa. I do not believe that it will count as income, and after research believe it will be an asset. I would like to be able to use it to pay off loans as well as use a portion for general living expenses. My family has an EFC of 0, but this is expected to go up in 2019 with my dads new job (probably 60k). From the research I have done, it looks like my best course of action is just to ensure that I have as little money in my checking account as possible on the date that I file my fafsa. Is this correct? And if not, what is the best way for me to ensure I continue to receive financial aid for the next 4 years at my UC as long as I continue receiving 15k every year as a part of the insurance settlement. My parents will not be able to contribute anything to my tuition and I will already need to cover the required 10k that students are expected to pay at a UC. I was also wondering if it would be okay for me to get a job or if that would hurt my aid even more. Thanks for the help!
You need to honestly report assets that you hold in your name.
You might be able to put the money in a 529 account and for FAFSA it should be considered to be a parent asset then.
The calculation is more favorable for parent assets, and an asset protection allowance applies, before it is assessed at about 5%.
Student assets are assessed at 20%, unless auto zero EFC or simplified needs test apply.
The student income protection allowance was over $6,000 in this year’s FAFSA EFC formula. And federal, state and social security taxes are deducted as well before it affects your EFC.
So, yes, you can work. If you get a federal work study job on campus, that income doesn’t count for FAFSA at all. There is a question on the FAFSA that asks about “income from need based employment” or something like that.
What year will your dad’s income go up? 2019? If so, that will be used on the 2021-2022 FAFSA form.
Did you qualify for the simplified needs test on the FAFSA this year? Or auto $0 EFC? For either of those, your assets are not reported. If your parent income is sufficiently low in 2018, and you should already know this…you could qualify again in 2020-2021.
Are you starting college this fall 2019?
What loans are you paying off? College loans? If so, get that money out of your account before you file your FAFSA form. In other words…pay for college or loans or whatever before the day you file your FAFSA form.
ETA…have a talk with your financial aid office. It’s possible that this insurance settlement money might be considered a special circumstance. Especially of it is used for things related to any injury.
Having or earning more money is never a bad thing when it comes to paying for college. Yes, need-based aid may decrease if a student reports greater assets or a higher income, but it will never be on anything even close to a dollar-for-dollar basis.
It is great to have it, but if there are things you are going to spend it on anyway (car payments, life insurance, home or renter’s insurance etc.), then by all means, do so before you file your FAFSA. Honestly showing you have lower assets will show you have less available for school, you are more needy, and needs-met schools will offer you more.
You need to find out what the criteria is for qualifying for Calgrant. Is it parent income, assets?
The Pell Grant might go away, depending on how much the FAFSA EFC changes in future years.