<p>We had a house fire on January 10. We received an advance from the insurance company in order to get our immediate needs. We also received gifts of money from various individuals to help replace items. Since all this was earmarked for household and personal items, I did not claim it on the FAFSA. </p>
<p>Right now we have an expected EFC of 0. Could this money affect it since we have received a fairly decent influx of cash?</p>
<p>FAFSA is based on the previous year (Jan 09 to Dec 09) …I’m assuming you are talking about Jan 10 of 2010 fire in which case it would not have been included in the FAFSA you filled out.</p>
<p>cash and investments are reported as of the day you begin to fill out FAFSA. If you began FAFSA before the fire or receipt of the gifts, they’re not reported on the 2010 form.</p>
<p>I know that some are going to yell at me for this…but so be it.</p>
<p>If I received a large amount for a fire, there is NO WAY I would allow that to affect a FAFSA since obviously that money is not for schooling - it’s to replace the house and the items inside!</p>
<p>So, (and I’m sure people will flip out) I would put all that money in some trusted person’s name (a parent or sibling or other child if possible) while the whole FAFSA process was going on. </p>
<p>Sorry to those who find that dishonest, but the thought that that money would affect EFC is ridiculous. Technically, most of that money has to be used on the home if that home has a mortgage (which I imagine it does). The homeowner has an obligation to restore the house to its original value - otherwise the mortgage holder would have a valueless asset.</p>
<p>However, if there’s a more ethical way to handle the money and not have it affect FAFSA, then great!!!</p>
<p>I agree completely with mom2collegekids! :)</p>
<p>I agree with mom2collegekids in theory…but that’s not how it works.</p>
<p>The assets MUST be reported as the balances in the accounts as of the day of the original filing of the taxes.</p>
<p>BUT if you have had a fire, this is VERY extenuating circumstances…and I would think this would be something that at the very least is worth contacting the colleges about…as a special circumstance.</p>
<p>I should have been more clear about the money. We have received just an initial advance to get the things we need most. The money to repair the house is in an escrow account we don’t have access to. At the time we completed the FAFSA, I had used nearly all the money from the advance. What was left wasn’t very much, but could possibly affect the EFC and that was why I asked.</p>
<p>If it does, I will contact the school as suggested. That money only made a dent in what will have to be replaced, and I could have easily gone through it all except for the fact we can’t buy furniture yet. </p>
<p>Thanks for the replies!</p>
<p>I’m not concerned about the colleges…</p>
<p>I’m concerned because the OP has an EFC of 0…meaning full Pell eligibility. I don’t think the compassionate school can force a Pell grant & other fed free money if that EFC jumps too high because of the fire money.</p>
<p>However, since it sounds like the FAFSA has been submitted and the money has been spent, this may end up being a non-issue.</p>
<p>I’m also concerned about next year’s application. Will any of the money that has been given to replace clothes/furniture/etc be counted as income?</p>
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<p>I would think it would need to be a goodly amount to affect your EFC. There IS an asset protection for parents…and I believe ours was in the $30-35,000 range. So only assets in excess of the asset protection are going to affect the EFC…right Swimcatsmom?</p>
<p>Right. Assets under the protected allowances do not affect the EFC. Also as you have a 0 EFC it may be that you qualified for the auto 0 EFC (income below $30k and file a 1040ez/a or meet other criteria) or the simplified needs test (income below $50k and file a 1040a/ez or meet other criteria). It seemds likely that the money will have no impact.</p>
<p>If the money is received in 2010, will it be considered “an asset” or “income” when FAFSA is filed next year?</p>
<p>Interesting conversation, in my response I related it to the house and a 2010 event at which point theoretically the money is turned back into the house (which isn’t counted for FAFSA anyway.) I guess I use asset valuations as of Dec. 31 since that is the most current info I typically have been I do FAFSA in later January before January statements are issued so wasn’t even thinking in terms of it being hard currency…that’s probably stretchiing the logic abit…but one of the reasons that the “point in time day you fill out the form” convention for the FAFSA is alittle wierd to me, I always wondered why they just didn’t say December 31.</p>
<p>First, I’m so sorry you’re dealing with the results from a fire. My parents’ house burned down, and even though nobody was injured, it is still a tremendous emotional and physical loss. </p>
<p>I don’t know how your family’s insurance company handles things, but the company my parents were insured with paid claims as follows:
<p>You have my sympathy, and I hope your family is able to move forward without too much delay.</p>
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<p>If it’s in the bank account, it would be an asset. BUT it would need to still be there a year from now. I would hope that the family would be using it to replace or otherwise deal with their fire losses…and that this would be complete by then.</p>
<p>HOWEVER, I would keep documentation of the fire issues and any info from the insurance company. Perhaps Kelsmom can chime in…but money of this type might be considered in a special circumstances request, especially if the jobs are being completed and the money is reserved for the payment.</p>
<p>A friend of ours had a flood in their basement and deposited the settlement money in their checking account. Their accountant advised them not list it as an asset because it was not an asset, it is a reimbursement for lost property that they have to replace. Completely different from an asset.</p>
<p>^^I agree with the accountant.</p>