My dad passed away last year and I’m just now getting his life insurance money. Once my dad died I changed my FASFA information to my mother and get a EFC of $0. With my mothers information I’m basically getting a full ride but I’m worried that for next year when I have to re-file for FASFA this may change. This money is supposed to last my mom and I awhile since my father was the sole provider. I don’t want my college to say that I have to pay full tuition or a big part of it because of this money. My question is do I have to report this new money on my FASFA currently and for next years FASFA? Will this change my EFC? What if the money is partially in stocks and bonds?
The money went to your mom, correct? If her income is low enough (that payout isn’t income, I don’t think), then the assets won’t count. It wouldn’t matter if the money is in stocks/bonds.
Inheritance can be treated as income, in the year it’s received. But this bump is usually one time only. You can ask for Professional Judgement, after your aid package. I’ve read some colleges might then reconsider, then flag it as one-time, for the next year. Don’t have the link but it was from Fast Web.
I’d worry as much about next year, the funds sitting as unprotected assets.
The tax form is NOT the only second qualifier for auto $0…and simplified needs. The person can also be eligible for a means tested benefit OR be a dislocated worker. The 1040A is just ONE of three additional qualifiers…once one meets the income threshold.
To the OP…if your mom has $0 for income…it is very likely you will be selected for verification. The college will want to know how she is laying living expenses (housing, utilities, food, clothing, etc) with NO income. Be prepared to provide some kid of documentation of how this is being done (e.g loving free with relatives, etc).
@cw7046 The money in your name is potentially a problem. Student assets are taxed much more heavily than parent assets on the FAFSA formulas. Is the amount of money from the insurance policy enough where it’s worth talking to a CPA who is familiar with FAFSA? (Not any old CPA, but one that specializes in college issues!)
Generally speaking, the reason parents take out life insurance for children is to pay for the costs of a child’s education and general welfare. Of course, I understand the desire to avoid leaving free aid money on the table but take comfort in the fact that your father looked out for your education expenses.
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Generally speaking, the reason parents take out life insurance for children is to pay for the costs of a child’s education and general welfare. Of course, I understand the desire to avoid leaving free aid money on the table but take comfort in the fact that your father looked out for your education expenses.
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I wouldn’t say that this is the case here. Mom is unemployed and for some reason all the life insurance is in the child’s name.
@cw7046 Are you saying that your mom got NOTHING and you got everything?
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This money is supposed to last my mom and I awhile since my father was the sole provider.
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Are you sure about these details? Seems odd that your dad wouldn’t have named your mom as a beneficiary of at least one insurance policy.
@thumper1 I agree the assets won’t be counted under simplified needs test. But with a large sum of money in student’s name, it’s particularly important to either manage finances to qualify for the simplified test for all four years of school or to understand and plan for the implications of not qualifying. This is why I would have OP consider a personal financial consultation.
Good luck finding s financial planner who understands and knows about college financial aid, simplified needs, auto$0 EFC, CSS Profile (and its impact at various colleges). Good luck.