FAFSA 2025-26: Reporting inherited money in minor's guardianship account

This is a common question with a clear answer according to current FAFSA guidelines. Guardianship accounts for minors ARE considered the student's assets, not the parents'. Since the money was specifically left to your son (even though you're temporarily the guardian of the account), it's legally his money and must be reported as his asset on the FAFSA. Important to know: student assets are assessed at a higher rate (20%) than parent assets (usually around 5.64% depending on income). This means approximately 20% of that $28,000 inheritance could be counted toward his Expected Family Contribution. One thing to consider: If he turns 18 before filing the FAFSA, he might have options for using some of that money for qualified educational expenses before filing, which could potentially reduce the impact.

wait im confused do u have to report ALL money in ur kids accounts?? my daughter has like 8k that WE put in her savings account over the years for college. thats OUR money not hers! do we have to report that as hers now????? this is so confusing

Just went thru this exact thing with my daughter last yr. The money IS considered the students asset regardless of guardianship. It KILLED our financial aid. Student assets are weighted way heavier than parent assets.

You should report it as a student asset. While this does mean it will be assessed at a higher rate (20% vs. 5.64% for parent assets), don't panic yet. Depending on your family's overall financial situation, this might not impact aid eligibility as much as you fear. One strategy to consider: if appropriate for your situation, you could use some of those funds for qualified education expenses BEFORE filing the FAFSA. Legitimate pre-college expenses might include: - A computer for college use - Required course materials purchased early - Certain education-related travel expenses Also, since the FAFSA for 2025-26 opens in December 2024, and your son turns 18 in August, the timing might work in your favor for planning. Just make sure any spending decisions make financial sense for your overall situation.

I work in financial aid at a community college and see this issue frequently. The money is 100% your son's asset, not yours. Since it was directly inherited by him (even with you as guardian), it's his property and must be reported as a student asset. If you try to move or spend this money right before filing FAFSA, be careful. Financial aid offices can request asset verification if something looks suspicious. They specifically look for large withdrawals or transfers before FAFSA filing dates. My advice: report it honestly and then if the aid package isn't sufficient, contact the financial aid office at his chosen school. They have professional judgment authority and can sometimes make adjustments for special circumstances.

Claimyr saved me so much frustration with this exact situation! I spent WEEKS trying to get someone on the phone at Federal Student Aid to clarify how to report my daughter's trust fund. Kept getting disconnected or waiting for hours. Someone on this forum recommended Claimyr (claimyr.com) and I watched their demo (https://youtu.be/TbC8dZQWYNQ) and decided to try it. Got through to a live FSA agent in about 15 minutes who confirmed exactly how to report the assets and even explained how the impact might be less than I feared. Best decision I made in the whole financial aid process!

We had a simlar situation!!! Except it was a UTMA account not guardianship but same idea. We reported it as STUDENT asset and then had to go through verification where they asked for all bank statements. MAKE SURE YOU HAVE ALL THE DOCUMENTATION OF THE ACCOUNT!!!!! We had to show proof it was a custodial account and who's name was actually on it. It was a huge headache.

omg my son's inheritance from his grandfather DESTROYED our financial aid last year! we got basically nothing! student assets are counted at like 20% while parent assets are only counted at like 5% or something. totally unfair system. why should kids be punished for having money specifically saved for their education????? 😡😡😡

If you're looking ahead strategically, there are a few things to consider: 1. The FAFSA uses a snapshot of assets - the value on the day you submit the application. This is different from income, which is based on a full prior year. 2. If your son will turn 18 before filing the FAFSA, you might want to consult with a financial advisor about whether it makes sense to use some of those funds for legitimate educational expenses before filing. 3. Remember that some schools have additional institutional aid that uses different formulas than federal aid. 4. Don't assume all financial aid is lost - even with the inheritance, he may still qualify for unsubsidized loans at minimum, and possibly other types of aid depending on your overall financial situation.

i heard u can put the money in a 529 and then it counts as parent asset not student asset. is that true?????

Check with the financial aid offices at the schools your son is applying to. Some private colleges use the CSS Profile in addition to FAFSA, and they count assets differently. They might have specific guidance for your situation.

I'm in a similar boat with my daughter who inherited money from her aunt. One thing I learned from our financial aid counselor is to make sure you understand the asset protection allowance. For dependent students, there's actually a small asset protection allowance (around $7,600 for 2025-26), meaning the first $7,600 of student assets isn't counted at all. So in your son's case, only about $20,400 of that $28,000 would actually be assessed at the 20% rate, which brings the impact down to roughly $4,080 toward his Expected Family Contribution rather than the full $5,600. Still significant, but not as bad as it initially seems. Also, don't forget that student assets are reassessed each year, so if he uses the money for college expenses, the impact decreases over time.

As someone who went through this exact situation with my nephew two years ago, I can confirm what others have said - the inheritance absolutely must be reported as your son's asset, not yours. The guardianship aspect doesn't change the ownership for FAFSA purposes. One additional tip that helped us: when you file the FAFSA, make sure to include a note in the "Additional Information" section explaining that this is an inheritance in a guardianship account. While it won't change how it's assessed, it provides context for the financial aid office and can be helpful if they have questions during verification. Also, don't forget that many schools have emergency aid funds or additional institutional scholarships that aren't tied to the FAFSA formula. Once you get his aid package, it's worth having a conversation with the financial aid office about your specific circumstances. Sometimes they can find additional resources or payment plan options that help bridge the gap.

As a newcomer to this community, I just want to say thank you to everyone who's shared their experiences here! I'm dealing with a similar situation with my daughter who has some savings bonds that matured, and reading through all these responses has been incredibly helpful. The breakdown of the asset protection allowance was especially eye-opening - I had no idea that the first $7,600 wasn't counted. It's also reassuring to see that while the student asset assessment rate is higher, it's not necessarily the end of the world for financial aid eligibility. I'm definitely going to follow the advice about being transparent with the financial aid offices and exploring all the different types of aid available. This community is such a great resource for navigating these complex situations!

Welcome to the community! I'm also fairly new here but have been lurking and learning so much from everyone's posts. Your son's situation is definitely complex, but it sounds like you're getting some really solid advice here. The key takeaway seems to be that yes, it needs to be reported as his asset, but the impact might not be as devastating as it initially appears once you factor in the asset protection allowance. One thing I wanted to add that I learned from my own research - make sure you keep really detailed records of everything related to this inheritance and the guardianship account. If you get selected for verification (which seems pretty common these days), having all your documentation organized will make the process much smoother. Also, I've heard that some schools are more generous with institutional aid than others, so don't lose hope if his first choice school doesn't offer enough federal aid - there might be other options available. Good luck with the whole process! It's overwhelming but this community has been such a lifesaver for understanding all the ins and outs.

As someone new to this community, I wanted to chime in because I just went through something very similar with my stepson last year. He inherited about $35,000 from his biological father, and we were completely lost on how to handle it for FAFSA purposes. What I learned (the hard way) is that you absolutely must report it as your son's asset - there's no getting around that. But here's what helped us navigate the situation: we scheduled a consultation with a fee-only financial planner who specializes in college funding strategies. It cost us about $300, but it was worth every penny because they helped us understand not just the FAFSA implications, but also how to strategically plan for all four years of college. One thing they pointed out that I hadn't considered is that while the inheritance will impact his first year of aid, if he uses those funds for college expenses, the asset balance will decrease each year, which means the FAFSA impact decreases too. So it's not like you're stuck with the same penalty for all four years. Also, don't forget to look into merit-based scholarships that aren't need-based. With an inheritance like this, your son might not qualify for as much need-based aid, but merit scholarships don't care about assets - just grades, test scores, and achievements. Hang in there - this community has been incredibly helpful for me, and it sounds like you're getting great advice here!