Life insurance question

olderbrother1
Tue, 04 Oct 2011 19:07:29 +0000

Hi all, I’m doing some research for my girlfriend’s little sister.

She is currently a freshman in college and qualified for some FAFSA loans (i dont know what, specifically) this year. Unfortunately, her mother passed away two months ago and one of the concerns is how the life insurance money that she and her father received is going to affect her ability to qualify for FAFSA loans. Is she essentially going to get punished for coming into a little bit of money as a result of her mother’s life insurance and now be less qualified to receive FAFSA loans? Or is it possible that she would now be more qualified since she is living in a home with only one parent/source of income?

Is there any exception that FAFSA has when it comes to life insurance payouts? If they put the money into something non-liquid such as a 2 year CD does FAFSA take that into account when calculating how much loan money she could receive? Are there any assets in general that FAFSA does not look at when calculating loans? They obviously dont want to break any laws, but they also want to make sure they qualify for as much loan money as possible since using the life insurance money to pay for college would seriously harm the financial well-being of the family, now that they are on one income.

Thanks in advance, I sincerely appreciate any help :)