Sold house, 200,000 extra cash goes onto FAFSA?

The escrow account is to secure the contract between two parties, and is just instructions to the escrow company to pay the money to Party A if THIS happens and or to Party B if THAT happens. If there is only one party, then it’s just a savings account and then it needs to be in a bank, insured by the FDIC. I don’t think an escrow company can hold funds for just one party.

Until the OP actually spends the money, it’s just a cash asset.