There’s nothing much you can do, if you plan to be truthful/ethical on FAFSA and CSS profile where the life insurance payout will count as an asset.
On FAFSA this will mean he will not be EFC zero anymore. You can ask NYU for professional judgment on the one time life insurance payout….maybe they remove it as an income item, but I expect they will still see it as an asset available to help pay for college (assuming it’s unspent as of the filling day). I would also talk with NYU. You don’t have to identify yourself.
@kelsmom? I don’t think any coming fafsa changes would change how a life insurance payout is handled either?