Ask Terry Questions Inheritance affect on financial aid for college

Inheritance affect on financial aid for college

By Terry Savage on July 16, 2019 | College Savings / Student Loans

My Grandson will be a senior in High School in August. His family has very little income or assets. My x husband has just passed away and their family is now going to inherit some money. What is the best way this so that it will not affect their ability to get financial aid. Thank You

Terry Says

Ugh!  I don’t think there is much that can be done about this — once the inheritance is distributed.  The family must disclose ALL their assets on the FAFSA form.  And once they get the money — whether they put it in the bank or in an investment account or anywhere else — it must be disclosed.  I truly hope the grandson did not get an inheritance directly, because that would weigh about five times as heavily against them in the financial aid formula.

The FAFSA form can be filed as early as October 1 of the senior year — and it uses information from the tax return of the previous year, so maybe the timing will work out and the family will qualify for financial aid at least for the first year of school.

AND, I hope the family decides to use this money to pay for college — instead of a vacation trip or a new home.  (But the value of the family home is not counted in “assets” for the FAFSA form!)




a personal
finance question