$ 30,000
Without insurance asset, it would be? $ 7,500
Ok. So the life insurance is over $110,000?
If your EFC without the insurance assets would be $7500, you won’t qualify for Pell (you have several threads going, and you said you wanted to qualify for Pell). Since NU does meet need, then it may not matter as they will make up the rest. You also said your son doesn’t want any loans, but I’m pretty sure NU does include loans in the package. You should check.
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Now...if the son chooses to gift a portion of that to his dad, fine. But there is a limit on how much can be gifted, isn't there...annually?
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I don’t know how it works in cases like this . People pay off other people’s medical bills…are those gifts?
I just looked it up…if the son pays the medical bill, it is not subject to gift tax…same if someone pays another’s’ tuition bill.
That is the idea. Thank you
Northwestern meets full need. The problem may be both the amount and the annuity. Was the person who advised an annuity up on how finaid works?
Yes
Because annuities count as non-qualified or qualified and reporting is different for each. (Were you aware of this when you filled out the CSS?)
I would not count on NU going along with this situation. They have your financials for the year and they will see the hanky panky you are doing. I think you have to pass up NU and apply elsewhere next year. Those debts are not your son’s debts. So he basically is not willing to use his money to pay for an expensive college, he prefers the college to pay for him. It seems that he should then use his money to pay for a college he finds affordable.
This is not hanky panky. If the college ever asked, what happened to the money, the legit answer is…my mom was very sick, she died, she left a lot of medical debt and I used the life insurance money to pay those debts.
that is NOT hanky panky and it’s kind of insulting to suggest that.
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my wife passed away last year and life insurance amount is stored in my son's annuity accout until he becomes 18 years old.
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Assuming that the life insurance policy was purchased with marital funds, why was the son the beneficiary, and not the husband? Did you sign a waive agreeing to that because I don’t think that’s not legal in any state…unless the surviving spouse agrees to it. (such laws exist to prevent straying spouses from naming lovers as beneficiaries of policies paid for with marital funds.)
or were you the beneficiary and you placed the money in an annuity?
I would contact the financial aid office and ask some questions. My experience with full need met schools - any student assets are assumed to be spent over four years. Even if you spend the entire student asset in year one the FA will expect 25% of that asset for each year. So if you had $40,000 is student assets they would expect $10k per year from the asset even if you spent the $40k in year one. I don’t know if it would be different if the student took a gap year and the money was gone. The annuity may be set up to disallow the father using that money for anything but education. Ask the FA office they should be able to project what the FA should be next year assuming you spent the entire asset in year one. If this an annuity that pays annually you may not be able to draw the entire amount in one year. Check the paperwork with the annuity also.
OK…let’s try some arithmetic here. The OP says his son’s EFC is $30,000 this year, and will be $10,000 next year. He seems sure of that. This would imply that $20,000 of the EFC amount on the FAFSA is from the student asset. This is $100,000 (right? 20% of $100,000 is $20,000).
To the OP…if this is accurate, then sure, spend down your son’s assets but think first…and read below first.
But oddly, NU was not willing to make any adjustments to their need based aid award…none. They were unwilling to consider unreimbursed medical expenses…which is strange because many schools will do this.
BUT before I did anything with these assets, anything, I would try to detemine if the family contribution NU calculates is really still going to be affordable. Otherwise, you will have spent down all of your SON’S assets, and will still not be able to,afford to send him to NU.
If NU will allow your son to defer his enrollment for a year, that is one thing. Given that there has been a parent death (recently?), you could make this request. A deferral of enrollment would mean your son would simply enroll a year later. BUT I don’t know what NU would think if the deferred enrollment meant a completely different financial aid award. The school meets full need, so maybe it would mean nothing.
OTOH, if the only choice NU offers is a gap year, and then having to reapply, I would think carefully. Your son sounds like a strong student. But there is a possibility that when he reapplies, he will not get accepted.
I’m also not sure what the issues would be in accepting the ED offer of admission, with that financial aid offer, and then asking for a deferral.
Now…thought two. If your son does take a gap year, and he reapplies to colleges, put some on his list that are merit awards and will not be dependent on his or your incomes or assets. I’m guessing he had the stats for a full scholarship award plus $2500 at University of Alabama, which would have left your costs at about $10,000 a year. Not bad. And they have an excellent engineering program with terrific facilities.
I’m not sure why you think NU is the ONLY college that your son can or should attend to get this engineering degree, especially given your financial concerns.
Maybe a gap year is a good idea…with applications to a whole set of different and affordable schools…
READ THIS PART. But back to an idea I floated either on this thread or your other one…
If the asset is $100,000, and you spend $20,000 of it this year, you will still have $80,000 left.
Over four years, you spend $80,000 and you still have $20,000 left at the end…and that doesn’t include any interest that annuity might earn.
Why wouldn’t you just pay the $30,000 to NU…$20,000 from the inheritance, and $10,000 from you. And let this kid go to NU now. You are planning to spend $10,000 anyway, once you have liquidated that asset.
The more I read this, the less your point of view makes sense. It is sounding to me like you want to pay off your debt with this inheritance money. Really…the arithmetic doesn’t make that make sense in terms of how you are funding college. You have that $20,000 a year. It is for college. If you can, use it for that.
My son got acceptance from Northwestern University from early decision.
And we got financial award from NU that family contribution was more than half of whole budget (about 40k).
because of student asset.(my wife passed away last year and life insurance amount is stored in my son’s annuity accout until he becomes 18 years old.)
So we appealed but did not work.
Now we have to pay for 40k. Since my wife had been for sick for 7 years therefore, we have a lot of debt here and there.
If my son takes a gap year and used up paying for all the debts, family contritution will go down nex year when he returns to Northwestern University?
Also, do they compare prior css file when they evaluate next year?
I know it is very silly question, but I am trying to find the way my son can still go to NU and paying for family debts as well.
Thank you!!
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Did you sign a waive agreeing to that because I don’t think that’s not legal in any state…unless the surviving spouse agrees to it.
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oh good heavens…I was editing and made it worse…lol.
should be…Did you sign a waive agreeing to that because I don’t think that’s legal in any state…unless the surviving spouse agrees to it.
He has talked about just moving the money into his acct from his son’s. That’s hanky panky.
@BrownParent
Simply moving the money could be. I was responding to your implication that the son paying the dad’s remaining medical debts was wrong ( “Those debts are not your son’s debts”. ).
I say “could be” because the OP’s initial wording sounds odd. The money is from life insurance, and the beneficiary should have been the spouse. If it was, and he put the money into an annuity for his son, then having the son give the money back to dad wouldn’t be wrong or odd.
There is nothing wrong with a son paying for his deceased mom’s medical debts, even tho those debts have become the surviving spouse’s debt (the dad’s).
Frankly, since the money source was LIFE INSURANCE, it is logical that the money SHOULD ethically go towards any debts that came from the deceased!
Sounds like dad met with a financial aid advisor who counseled him on moving the money into an annuity to avoid it counting as an asset for FAFSA and institutional aid, but it didn’t work.
Let’s hope this advisor didn’t get a hefty product-based fee for selling the annuity if this is what took place.
Are there more children or is son an only child? Are there more annuities for other kids?
I have life insurance accounts where my kids are the beneficiaries. My husband had to agree to this, but it was not an issue. I also have accounts that are for him in the event that I die first. I think I’m worth more dead than alive.
Perhaps the father also was beneficiary of a different policy.
The mom was ill for some time. I’m sorry for the fsmily in her illness and death. The parents also, however, knew that they had a youngster approaching college…and a smart one. Perhaps this inheritance was the mom’s way of planning for some of the college costs in the event she died.