Low Income Single Parent - Have Assets

Paying for College
1

Hi there. Have income 60k but assets of @325,000 - all from Life Insurance from dd’s dad. What are best options for financial aid/questbridge/anything else you can suggest! We rent our apartment, no other assets.

2

Your assets are assessed by financial aid formulas at about 5 to 6%, so 300K in assets means that you would be expected to pay 15 to 18K per year from your assets towards your DD’s education. There will also be some sort of contribution from your income. Run the FAFSA4Caster here to see your total expected contribution:

https://studentaid.ed.gov/sa/fafsa/estimate

If this contribution is more than you feel comfortable paying, you should look at using community college or merit aid schools to reduce your cost.

3

if your 325k is sitting in the bank, it will be assessed at the parent rate (5.6%) and will add $18,200 to your federal EFC (making you ineligible for PELL, SEOG, etc).

Any monies in your daughters name will be assessed at 20%.

Is you 69k before or after taxes? Is your 60k after continuations to your tax deferred retirement account (any contributions you make will be added back in as income).

It probably will knock you out of the box for Questbridge, which takes assets (cash and savings) into consideration.

https://www.questbridge.org/high-school-students/national-college-match/who-should-apply

If you are from NYC/NYS she would probably be eligible for the excelsior scholarship which would give her free tuition to SUNY/CUNY.

Then you would be able to pay room and board. Using a bottoms up approach, look there to put together a list of financial safeties. If she is admitted to an honors programs many of the sinus will allow this to be stackable.

4

If you can qualify for simplified asset treatment (income under $50k, file a 1040A or a few other qualifiers), the assets will not be considered. You can get a $60k income down to $50k by making contributions to a 401k or an IRA. The problem is you have to do this in the tax year before you file FAFSA (so Oct FAFSA filing will use 2016 tax year).

5

For the 2018-2019 fafsa…it’s a little late to reduce income by putting money into an IRA. That FAFSA uses the 2016 income tax info…so you would have needed to do so in…2016.

To qualify for simplified needs test…where your assets are not counted…you need income be,ow $50,000 AGI…and one of the following…

  1. Ability to file a 1040 A or 1040 EZ tax form.

OR

  1. Qualify for a means tested benefit like free/reduced lunch, Snap, or the like.

OR

  1. Parent is a dislocated worker.
6

Even if Op were able to do these recommendations (based on 2016 income and assets based on the day of filing), these recommendations would only help op on the FAFSA (at Fafsa only schools)

For the majority of the QuestBridge schools and schools with generous need based aid Op would also need to file the CSS profile or the school’s own aid form, which would not ignore her assets

7

If your child applies to a CSS Profile school, the assets will count no matter how low your income is. There is no means testing for those schools.

Is your $60k of income including any income from the $325k?

Is the $325k of assets yours alone or is some/all of it your child’s?

8

How is that money held? Is it in and IRA! Or annuity? Is it in general savings/CDs/etc.? How it is held affects how it is evaluated by the financial aid formulas.