Low death inheritance, disability, low-income, [financial aid] questions pls help [non-traditional independent college student]

Paying for College
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Hi, so I have scoured the forums already and kind of gotten some answers regarding my situation, but I wanted to ask anyway because I feel like this is sort of different from the others.

March 2023, my grandfather passed away and in July 2023, I was informed that I’d receive an inheritance from his death tax/will. The amount was roughly $27,500.

I am a single mom, 30, and currently disabled (not receiving any sort of $$ benefits, the struggle is real, and currently unemployed due to mental disability.) So, I have been living off my savings, which is due to run out soon, and I have applied for FAFSA, earlier in the year, but needed to appeal because my current income for 2023 does not reflect the 2021 tax return year (which is what they’re looking at.)

I will be using this money to pay off some credit debt (8k ish), put it toward some emergency savings fund for me and my daughter, and I was advised to put the rest into a high yield savings account. With that said, I will probably have about 15k to live off (paying rent, bills, ins.) for the remainder of the year, until i figure something else out.

So, long story short, I am pretty low-income, and the inheritance would be a one lump sum, which would be distributed out to several areas.

Now from what I learned from reading through this forum is that while an inheritance is nontaxable for taxes, it is considered an asset to FAFSA. Since I have no reported income (except for unemployment up until Jan to April 2023), would this greatly affect my financial assistance? And do I report the original amount received, or the remainder amount that will be there?

And since my financial aid application is still under review, I will be paying for the first 1/3 payments out of pocket, which if awarded, I will get a refund.

And one other question, I will be pending for HUD application/Section 8, but not approved yet. Since at the time I applied for FAFSA, I was not in this situation, would I have to update this information? Or leave it alone? Do I also update the school’s financial aid?

SORRY FOR THE QUESTIONS, but any assistance would be great.

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Also, I don’t know if this is worth noting, but I am a re-entry student for junior year, full-time (12 units). Okthxbai

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Tagging @kelsmom.

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Assets are reported as of the date of filing your FAFSA. Will there be a lot left in your accounts the day you file your FAFSA?

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Pay off all your debt, and buy anything you absolutely need, but have not yet gotten. Prepay rent if your landlord allows it. Pay all bills off, including utilities, before filing appeal. Car, computer, etc but only if absolutely necessary, then appeal fafsa. Yes, your savings will count against your need.

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If there is any left…

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Unfortunately, that is the idea here. People recieving public benefits risk losing those benefits if they save up money, for obvious reasons.

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@kelsmom is there no simplified needs test (or whatever it’s called now) for independent students such as this one!

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When do you expect to get the payment? If your grandfather passed away in March, it will take time to settle the estate. Before any of the heirs get ANYTHING, all debts need to be satisfied (which includes filing his 2023 income taxes for the three months he was alive). I have been an executor-- and everything took three times longer than the heirs expected. I waited 6 months to be able to file a K-1 which showed something like $100 in income… but it had to be filed and nobody got anything until all obligations were paid (the lawyer has likely put a notice in a newspaper announcing that anyone with a claim against the estate has until some date to come forward).

So before you get tangled in knots- call the lawyer who told you were getting roughly 27.5K and find out when that payment will be coming. For all you know, it will come long after any of this is relevant.

Sorry for your loss. And how wonderful that your grandad is helping you move forward!

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I am sorry for your loss.

You will not have to report anything this year. You already filed the 2023-24 FAFSA and did not have that money at the time. It doesn’t come into play this year.

It will come into play next year, but the SAI formula has changed for low income families. Here is a calculator, although I don’t know how accurate it is - but try it & just follow the steps, answering questions the way you think things will be in December or January, when the new FAFSA is available: https://www.collegemoneymethod.com/2024-25-student-aid-index-sai-calculator/. What is your SAI?