<p>I just found out the nonqualified annuities that I inherited from my mother and cashed out last year will be added back in as untaxed income on our FAFSA. Yes, I'm an idiot. The money is currently sitting in savings. I have no problem paying more because of the windfall, but it looks like it will inflate our EFC so much that we will lose all need based aid for next year.</p>
<p>So two questions:
Is asking for a professional judgement for this one time income bump likely to have any effect?</p>
<p>And if it doesn't, will we once again receive our original level of aid the following year? (This is the scariest thing for me, that once they take it away they won't give it back. Probably ridiculous, I know.)</p>
<p>It is possible that the school WILL consider this as a one time bump in your income. It certainly is worth asking. And especially since this in an inheritance from one of your parents. </p>
<p>Colleges evaluate need based aid annually. If your college meets full need, and there is a drop on your income and assets in subsequent years, you will likely see an increase in aid in subsequent years. If your college does NOT meet full need, there is no guarantee about this year, or any subsequent year with regards to need based aid.</p>
<p>ETA…I didn’t realize this was the parent posting…and that the inheritance was from the grandparent of the student. I thought the STUDENT had lost a parent.</p>
<p>Run…in looking at your other posts, it seems like your son is applying to,schools that do NOT meet full need for all students. That being the case…there is no guarantee he would have had aid to meet his need this year…or next.</p>
<p>^^^
That is an important point. The assumption that aid would return the following year may be unlikely since the school may never have intended to give much no matter what your EFC is.</p>
<p>You may want your child to take a gap year. It would be kind of sad for a one time inheritance to bump income so much that you have to spend it all.</p>
<p>I would be very concerned that all the money would get spent ONE year, and then the following years you’d have no money to put towards the gaps that may be likely.</p>
<p>What do the NPCs indicate with and without this bump? </p>
<p>“And if it doesn’t, will we once again receive our original level of aid the following year? (This is the scariest thing for me, that once they take it away they won’t give it back. Probably ridiculous, I know.)”</p>
<p>This isn’t ridiculous at all. It’s actually very likely at a school that doesn’t meet need. Once your child is a student, a school that doesn’t meet need has no incentive to fill later drops in EFC.</p>
<p>Sorry if I wasn’t clear, my son is currently a freshman so this will affect his sophomore year aid. Our current package is a combination of merit aid and school grant aid. They did indeed cover our entire need based on FAFSA EFC, but of course there is no guarantee. I would have been even more worried if this was regarding freshman aid.</p>
<p>We were successful with an appeal to our original aid package, they added a small additional merit award. So they have proven they are willing to be flexible. We had originally planned to take out small parent loans, but thought the inheritance would eliminate that, but unfortunately it may simply be negated by receiving less grant money.</p>
<p>So it doesn’t sound too hopeful, but I’ll take a shot at it anyway. I will send them an email on how to proceed once I get the taxes filed and FAFSA done, still waiting on 1099s.</p>
<p>It might be a good time to take a gap year. Friends of ours some years ago with two kids in college, got a bump up, a large one, which could have cost them in financial aid to the tune of $80K over time. The fin aid officer at their son’s school out and out said that the package he received coming in basically determines the rate for each year,as only that amount is set aside for the student in subsequent years. Both kids went to and were accepted to schools that did not guarantee to meet full need. Their one time bump was not cleared by professional judgement–it was a business payout that the parents immediately parlayed into starting their own business. The gap year took care of that problem neatly. </p>
<p>Though neither student got as much in their aid packages that subsequent, it would still made a substantial difference.</p>
<p>He can’t take a gap year, since he is already a freshman. I am going to just go out and buy a pair of rose colored glasses and hope for the best. On top of that, I just got an email from brokerage stating my 1099s won’t be available until end of February, possible mid March. Ugh.</p>
<p>Well…here is the good news. And I realize you may not view this as good! You are fortunate that you actually have that money to help pay for college costs. That is exactly what we did with the inheritance money when my mom died. We payed for college.</p>
<p>I’m just hoping it won’t be a wash, aid reduction equals the amount of the inheritance. I know my mother would have hoped the kids would benefit from the money. But I do agree we are fortunate in the grand scheme of things. Just for a moment I thought it might be a bit easier! S’ok I always function better with a bit of stress (tried to find an emoticon for that, but they all freak me out a little )</p>
<p>A couple of things…you should be able to view your brokerage account online and get the necessary info to complete the financial forms.</p>
<p>You could also complete the forms using the “will file” status, and make the BEST estimates you can make based on your information. Then update when the taxes are completed.</p>
<p>My friend had one child who was already in college as well as a high school senior heading off to college when they both took off a year after discussions with the colleges came to an impasse. For personal leaves of absence at that school, which is what their daughter took (no further info was needed) fin aid is resumed at the level left off. Not quite what happened in reality as costs rose and all, but close. It amounted to at least a $40K savings, and possibly more, as the schools firmly stated that aid levels though not out and out guaranteed, are calculated with the previous year’s award as the starting point, so, yes future aid is jeopardized when a windfall comes into play in a year. Again, school vary with the way this works so you do have to specifically address this with your schools. </p>
<p>I get a little twitchy when 529 plans or specific college money is what a parent is trying to preserve, though even then I understand the sentiment. But sometimes, an inheritance or other payment has truly been earmarked in financial plans for other things. My husbands cousins really were hurt badly when their grandparents died which meant a family farm was inherited, and it bumped all of the kids out of qualifying for financial aid without bringing any income to the table. The parents had always planned on living there at retirement, it was an integral part of their retirement plans, not to mention the history behind that inheritance, and so to sell it was not something they wanted. The timing of the grandparents death was most unfortunate and they did not make any provisions as to the effects of fin aid on this happening. Fin aid often gets ignored in estate planning and things like this. The family was/is very low income, and this is really something the parents would not budge, but it took the kids out of the running for any fin aid other than loans, when the were both PELL and state eligible.</p>
<p>I have no problem spending all the money on college, that was always the intention. This experience has made me aware that we will have to make careful choices later in life if we are planning on leaving money to our children and there is the possibility that they will have kids in college at the time. </p>
<p>I would prefer to do my taxes and FAFSA in one go, but that is obviously not going to happen this year. I sent my broker an email to try to get the bare bones info I need for a reasonable estimate, and got a bounce back email saying she was out of the office until November 12th. I certainly hope not, lol.</p>
<p>If you claimed it as income and as an asset, this will penalize you — you reported it correctly, but now you should petition the aid office to remove the income & leave the asset (this would be the preferred method, since assets have a protection allowance). I have done adjustments like this. It is not “required,” but many aid office will adjust this way. Definitely talk to them!!</p>
<p>I sent an email to the financial aid office to see if this one time payment would be considered a special circumstance and what we could expect in future years if not. So we will see where that leads. </p>
<p>Update by OP here. We were told by the Finanacial Aid Administrator to send in a special circumstances request with all supporting documentation. They did indeed remove the annuities as income, and we received a new FAFSA EFC and SAR. Today we received my son’s FA package and it is the same as last year and we are so very relieved. Thanks RPI!</p>
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