My mom is planning to pay off her mortgage on the house she owns and me and my 2 other siblings live in. She is the custodial parent in the divorce. The remaining mortgage is only $15K and she is going to pay it off. I get the maximum amount of pell grant currently and I am enrolled in an associate degree community college. She told me that is she pays off the mortgage, it’s ok, because she only earns $19K as her income with my dads $13K in child support that I will still get the same pell grant money. Is it ok that she plans to NOT have a mortgage as an expense when she renews the FAFSA?
Tell your mom…your primary residence…the place where you all live…is NOT NOT NOT on the fafsa at all. Not at all.
But she will have $15,000 less in savings. But I believe that is below the asset protection allowance for a single parent.
Why does she REALLY want to pay off the mortgage?
You have a few moving pieces that your family needs to consider.
Remember most FAFSA only schools do not meet 100% demonstrated need.
How much will the 4 year college cost?
Will your PELL and student loan cover your cost at the 4 year school?
How much longer can your mom expect to receive child support payments?
Is she receiving child support and alimony or just child support?
How many years is remaining on the mortgage?
If she pays the mortgage now, will she shift her former mortgage payment to help you pay for school or place it in savings for your other siblings?
IMHO, she should not pay off the mortgage at the expense of not having enough money to help you pay for college.
I think she qualifies for Auto $0 with a $19k income. All the other information should be grayed out on the FAFSA
$19000 in mom income…plus $13,000 in child support. Which I think counts.
But she might qualify for simplified needs.
Regardless…the primary home mortgage does NOT NOT appear on the FAFSA. Payments for the primary home mortgage do not appear on the fafsa.
NOTHING about this kid’s primary residence appears on the FAFSA. At all.
So it doesn’t matter what the parent does for FAFSA purposes in terms of paying off $15,000 in mortgage balance.
She is right. The primary residence is not counted on the FAFSA at all. 15,000 in the bank is assessed, but 15,000 invested in your home is not.
If you transfer to a school that takes the Profile, they will ask about your home value and any mortgage. But, having 15,000 in the bank would be assessed as well, so the net effect on your aid should be minimal.
For FAFSA purposes, I believe the $15,000 in the bank is below the asset protection allowance amount.
And if this student qualifies for simplfied needs test…assets aren’t counted on the fafsa at all.
The ONLY thing paying off the mortgage will do is leave the Mom with $15,000 less money in the bank…but for FAFSA purposes, that might not matter at all…if she qualified for simplified needs or that’s the only money in the bank she has.
Either way is fine, but the mom may just want to make sure that she no longer has a mortgage payment. The child support payments will soon be reduced and maybe eliminated so she may just be thinking ahead and figuring out how she’s going to live on $20k per year.
You’ll still get your Pell grant.
The $15k in the bank for a single parent may NOT be below the asset protection. I think it was about $12k (based on age). I think my first year it was $10k, but then they redid the formula and it did go up.
I don’t think the child support is asked if you qualify for $0 assets. You definitely don’t list the money in the bank unless the state you live/go to school in asks for it.
It won’t matter here as this is a primary residence.