FAFSA asking for daughter's savings - Should life insurance payout and Social Security survivor benefits be included?

I'm sorry about your husband. Yes, both the life insurance money in the savings account AND the Social Security benefits need to be reported as your daughter's assets on the FAFSA. The FAFSA uses what's called the Student Asset Protection Allowance, but it only shields a small portion. Student assets are assessed at 20% for the SAI calculation, while parent assets are only assessed at around 5.64%, so it significantly impacts aid eligibility.

just went thru this with my son last yr. the life insurance money DEF counts if its in her name. we moved some $ around before filing and it helped alot with his SAI score. not sure about SS tho

Financial aid advisor here. The previous comments are partially correct, but let me clarify a few things: 1. Life insurance proceeds in a savings account under her name ARE counted as a student asset and assessed at 20% for the SAI calculation 2. Monthly Social Security survivor benefits are reported as untaxed income, NOT as assets 3. If the life insurance money is in a 529 plan with you as the owner (not your daughter), it would be reported as a parent asset and assessed at the lower rate (~5.64%) For the 2025-2026 FAFSA, these distinctions are especially important since the simplified formula has changed. You may want to consider moving those funds into a parent-owned account or 529 plan before submitting the FAFSA if possible.

You're welcome! For the 2025-2026 FAFSA, they'll be looking at your assets as of the date you file the application (no longer a specific prior year as with the older FAFSA versions). Moving the money now could help, but you should be careful about timing. Large withdrawals from a student account just before filing can trigger verification flags. If you do transfer the money, document your reasons carefully. Some colleges may ask about recent account changes during verification. Also, keep in mind that each school handles professional judgment differently. Some financial aid offices will make adjustments for your situation if you explain that the life insurance was specifically intended for education.

I tried calling FSA multiple times to get clarity on exactly this situation last year. Spent hours on hold just to get disconnected. Finally used Claimyr (claimyr.com) to get through to an actual agent at Federal Student Aid. They have this cool system where they wait on hold for you and call you back when an agent is on the line. They even have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent confirmed what others said here - life insurance in the student's name counts as their asset, but they also told me I could submit a special circumstances request directly to each college explaining the situation. Two schools actually adjusted my daughter's financial aid package after we explained.

I have a kind of similar situation where my son received an inheritance from his grandparent. What we did was use some of that money to pay off my car loan before filing FAFSA. That way the money wasn't sitting in his account anymore but it also benefited our family finances. Would something like that work in your situation? Not sure if that's allowed but no one questioned us about it.

Aren't there some special rules about survivor benefits and college? I thought I read something about Social Security continuing payments while the student is in college? Maybe that's different from what you're asking though...

Thank you everyone for the helpful advice! I'm going to call my daughter's top choice schools tomorrow to ask about their professional judgment process for special circumstances. And I'll use that Claimyr service to get through to FSA so I can make sure I understand all the rules correctly. It still seems unfair that money meant to replace her dad's support for college is counting against her, but at least I have some options to explore now.

I'm so sorry for your loss. As a newcomer here, I wanted to share that I'm in a very similar situation with my son who lost his father two years ago. After reading through all these responses, I'm realizing I may have made some mistakes with how we've been handling his survivor benefits and life insurance money. The distinction between parent vs student assets is something I had no idea about! This community seems incredibly knowledgeable and supportive. Thank you all for sharing your experiences - it's helping families like ours navigate this confusing process during an already difficult time.

As someone new to this community, I just wanted to say how grateful I am to have found this discussion. My daughter is also 18 and we're dealing with FAFSA for the first time after losing my husband last year. The information shared here about the difference between parent and student assets has been eye-opening - I had no idea that money in her name would be assessed so much more heavily than if it were in mine. It's frustrating that families who've already suffered such a devastating loss have to navigate these complex financial penalties on top of everything else. Thank you to everyone who shared their experiences and advice, especially the financial aid advisor who clarified the specific rules. This kind of peer support makes such a difference when you're trying to figure out how to help your child access education while dealing with grief and financial uncertainty.

As a newcomer to this community, I want to thank everyone for this incredibly informative discussion. I'm also navigating FAFSA as a single parent after losing my spouse, and reading through these responses has been so enlightening. The breakdown of how parent vs. student assets are treated differently is something I wish was explained more clearly in the official FAFSA materials. It's heartbreaking that families who have already endured such loss face additional financial penalties in the aid process. I'm particularly grateful for the practical advice about professional judgment requests and the Claimyr service recommendation - these are resources I never would have known about otherwise. This community's support and knowledge sharing is invaluable for those of us trying to help our children access education while managing grief and complex financial situations.

As a newcomer to this community, I'm deeply moved by this discussion and the support being shared here. I'm also facing the FAFSA process as a widowed parent with a college-bound teenager, and like many others who have commented, I had no idea about the significant difference in how parent versus student assets are assessed. Reading through everyone's experiences has been both heartbreaking and incredibly educational. It's particularly frustrating that families who have already suffered such profound loss face these additional financial barriers when trying to help their children access higher education. The practical advice shared here - especially about professional judgment requests, the Claimyr service for reaching FSA, and the importance of proper documentation - is invaluable information that seems impossible to find through official channels. Thank you to everyone who has shared their knowledge and experiences. This kind of peer support and information sharing makes such a difference when you're trying to navigate complex systems while still processing grief and helping your child move forward with their educational goals.

As a newcomer to this community, I'm incredibly grateful to have found this discussion. I'm also navigating the FAFSA process as a single parent after losing my husband two years ago, and reading through all these responses has been both eye-opening and reassuring. Like so many others here, I had no idea about the significant difference in how parent versus student assets are treated - the 20% assessment rate for student assets versus the much lower rate for parent assets is something that should be explained much more clearly in the official materials. My son received life insurance proceeds that we put in his name, thinking we were doing the right thing for his college fund, but now I realize this may have actually hurt his financial aid eligibility. The practical advice shared here about professional judgment requests, proper documentation, and services like Claimyr to reach FSA representatives is invaluable. It's heartbreaking that families who have already endured such tremendous loss face these additional complexities in trying to secure educational opportunities for our children. Thank you to everyone, especially the financial aid advisor, for sharing such detailed and helpful information. This community's support means more than you know during what is already such a challenging time in our lives.

As a newcomer to this community, I want to express my heartfelt gratitude for finding this incredibly informative and supportive discussion. I'm also a single parent navigating the FAFSA process after losing my spouse three years ago, and like so many others who have commented here, I was completely unaware of how drastically different the treatment of parent versus student assets could impact financial aid eligibility. My daughter received both life insurance proceeds and Social Security survivor benefits, and we deposited everything into accounts in her name, thinking we were being responsible stewards of money intended for her future. Reading through these responses has been a real eye-opener about the 20% assessment rate for student assets versus the much lower parent asset rate. It's deeply frustrating that families who have already endured such profound loss face these additional financial penalties in the aid process, and that this crucial information seems so difficult to find through official channels. The practical advice shared here - particularly about professional judgment requests, the Claimyr service for reaching FSA representatives, and the importance of thorough documentation - is invaluable guidance I never would have discovered otherwise. Thank you to everyone, especially the financial aid advisor, for sharing such detailed knowledge and personal experiences. This community's support provides hope during what feels like an overwhelming process at an already challenging time in our lives.

As a newcomer to this community, I'm so grateful to have found this discussion at exactly the right time. I'm also facing the FAFSA process as a single parent after losing my husband last year, and my daughter just turned 18. Like so many others here, we received life insurance proceeds that went into a savings account in her name, and she's been receiving Social Security survivor benefits. Reading through all these responses has been incredibly eye-opening - I had absolutely no idea about the difference between how parent and student assets are assessed (20% vs 5.64%!). It's both heartbreaking and frustrating that families who've already suffered such devastating loss face these additional financial hurdles when trying to help our children access higher education. The detailed explanations from the financial aid advisor here have been more helpful than anything I've found through official channels. I'm definitely going to look into the professional judgment process and try that Claimyr service to actually reach someone at FSA. Thank you to everyone for sharing your experiences and advice - knowing we're not navigating this complex process alone during such a difficult time means everything. This community's knowledge and support is truly invaluable.

As a newcomer to this community, I want to thank everyone for this incredibly detailed and supportive discussion. I'm also a single parent dealing with FAFSA after losing my spouse, and my son will be starting college next year. Reading through all these responses has been both heartbreaking and enlightening - it's clear that so many of us are facing similar challenges while trying to navigate this complex system during an already difficult time. The explanation about the 20% assessment rate for student assets versus the much lower parent asset rate is something I never would have understood without this community's help. Like many others here, we put his life insurance proceeds and survivor benefits into accounts in his name, thinking we were being responsible, only to discover through this thread how that impacts aid eligibility. The practical advice about professional judgment requests, the Claimyr service for reaching FSA, and the importance of proper documentation is invaluable guidance that seems impossible to find through official channels. It's deeply frustrating that families who have already endured such profound loss face these additional financial penalties, but I'm so grateful for this community's knowledge and support. Thank you especially to the financial aid advisor for the clear explanations, and to everyone for sharing their experiences and creating such a helpful resource for those of us trying to help our children access education while managing grief and financial uncertainty.

As a newcomer to this community, I'm deeply grateful to have found this discussion during such a challenging time. I'm also a single parent navigating FAFSA after losing my husband, and my daughter is starting college applications soon. Reading through everyone's experiences has been incredibly eye-opening - I had no idea about the significant difference between parent and student asset assessment rates until seeing it explained so clearly here. Like many others, we put her life insurance proceeds into an account in her name, thinking we were doing the right thing, but now I understand how this could impact her aid eligibility at that 20% rate. It's heartbreaking that families who've already suffered such tremendous loss face these additional financial complexities when trying to help our children access education. The practical advice shared here about professional judgment requests, the Claimyr service, and proper documentation is invaluable information I never would have found through official channels. Thank you to everyone, especially the financial aid advisor, for creating such a supportive and informative space. Knowing we're not alone in facing these challenges while grieving makes such a difference during this overwhelming process.

As a newcomer to this community, I'm so thankful to have found this incredibly informative discussion right when I need it most. I'm also a single parent facing the FAFSA process after losing my spouse two years ago, and my son is applying to colleges for next fall. Like so many others who have shared here, I had absolutely no understanding of how differently parent versus student assets are assessed - the 20% rate for student assets compared to around 5.64% for parent assets is a crucial distinction that seems buried in the complexity of the system. We also received life insurance proceeds that went into an account in his name, and he receives Social Security survivor benefits. Reading everyone's experiences has been both heartbreaking (knowing so many families face these same challenges) and incredibly educational. The detailed explanation from the financial aid advisor about reporting life insurance as assets versus Social Security as untaxed income has clarified so much confusion I had. I'm definitely going to look into the professional judgment process and try the Claimyr service to actually reach someone at FSA. It's deeply frustrating that families who have already endured such loss face additional financial hurdles in accessing education, but I'm so grateful for this community's knowledge and support during what feels like an impossible process to navigate alone.