FAFSA confusion with SSD lump sum payments & multiple college accounts - will this mess up our aid?

The disability backpay probably won't affect ur FAFSA as much as u think. My dad got SSDI backpay right b4 i went to college too. What matters is ur 2023 tax info since FAFSA uses prior-prior year for 2025-2026. So if the lump sum was in 2024 it wont be on the tax form they look at. But if u have it sitting in ur checking account when u fill out FAFSA, then it counts as an asset. We moved some of ours to a CD to help pay for my later yrs

The good news is that for the 2025-2026 FAFSA, they'll be looking at your 2023 tax information, not 2024. So the SSD lump sum won't be counted as income if it was received in 2024. However, any remaining portion of that lump sum that's sitting in your bank accounts when you fill out the FAFSA will count as a parental asset. As for the non-529 investment account, if your wife is listed as the account owner (even if it was funded by grandparents), it counts as a parent asset. Only accounts with the student as the beneficiary AND owner count as student assets. Parent assets are assessed at a much lower rate (around 5.64%) compared to student assets (20%). Regarding the married filing separately status - this is fine but just be aware both parents' income must be reported on FAFSA regardless of filing status.

Wait are u sure the the seperate filing status doesn't matter?? My parents did that one year and it messed up there expected contribution A LOT. Married filing separate causes problems with the FASFA i thought?????

For the SSD payments going to your daughter - those are classified differently than the parent payments. Student benefits are actually counted as untaxed income TO THE STUDENT on the FAFSA. This is important because student income is assessed at a higher rate than parent income. However, there is an Income Protection Allowance for students (about $7,600 for 2025-2026) before their income starts counting against aid eligibility. And one correction I need to make - for the 2025-2026 FAFSA, you'll be using 2024 tax information (not 2023). The new FAFSA for 2024-2025 already made this switch from prior-prior year to just prior year. So that lump sum could potentially appear as income if it was considered taxable on your 2024 return. I recommend talking to a financial aid officer at your daughter's university who can help with your specific situation.

Actually, I need to double-check my information about the tax year. Let me verify - the 2024-2025 FAFSA is still using 2022 tax info (prior-prior year). For 2025-2026, they'll use 2023 tax info unless the Department of Education announces changes. I apologize for any confusion.

my brother gets disability payments 2 and we had to report them on my fafsa as my income even tho I dont even touch the money! its so dumb how they count that againsst kids. he get $980 a month and i had to list it as MY income even tho its deposited into our parents account. totally messed up my SAI calculation

Hey there! I ran into a similar nightmare with disability payments and FAFSA last year when helping my niece apply. Couldn't get answers for weeks until I found Claimyr. It's a service that got me through to an actual FSA agent in about 15 minutes instead of waiting on hold forever. I watched their demo video (https://youtu.be/TbC8dZQWYNQ) and it was exactly what I needed. Their website is claimyr.com and seriously saved me when I needed specific answers about disability benefits and asset reporting. The agent I spoke with gave me the exact info I needed for our complicated situation.

To clarify what several people have mentioned about tax years: The 2025-2026 FAFSA will use 2023 tax information unless the Department of Education changes their current approach. This is good news for you since the SSD lump sum received in 2024 won't be reflected in the income calculation. Regarding the non-529 investment account: If your wife is the owner (regardless of who funded it), it's reported as a parent asset, which is assessed at a maximum of 5.64% in the aid formula. If by chance your daughter is both the owner AND beneficiary, then it would be a student asset assessed at 20%. For your specific situation with multiple college accounts and SSD, I strongly recommend scheduling an appointment with a financial aid counselor at your daughter's prospective university. They can provide guidance tailored to your exact circumstances.

For the SSD payments your daughter receives: Yes, those would be reported as untaxed income for your daughter on the FAFSA. However, there is an income protection allowance (around $7,000-$7,600 for dependent students) before her income begins to count against aid eligibility. If her total income (including the SSD payments) exceeds that threshold, then 50% of the amount over the threshold would reduce her aid eligibility. Rest assured that the financial aid system does have some protections built in for families dealing with disabilities. The income protection allowance exists specifically to help in situations like yours.

DUDE the whole system is RIGGED. They penalize disabled families and families who actually save for college! My friend's parents spent all their money on vacations and cars and she got way more aid than me even tho my parents were responsible and saved. And the SSD thing is total BS - its supposed to HELP disabled families not HURT them by taking away college money! Don't get me started on these stupid investment accounts that grandparents set up thinking they're helping but actually make things worse!

I'd like to add some clarification that might help. While it's true the system isn't perfect, there are some provisions that recognize disability situations: 1. Medical expenses that exceed 11% of the Income Protection Allowance can be reported on the FAFSA as special circumstances. 2. For the 529 plan and the other investment account: These are considered parental assets if the parent is the account owner, which reduces your Expected Family Contribution far less than if they were student assets. 3. Many colleges have special circumstances appeals specifically for families with disabilities. Once you receive your aid offer, you can request a professional judgment review and provide documentation about the disability-related expenses. Don't get discouraged before going through the process. Your daughter should still apply for all possible scholarships and aid options.

I just wanted to add something that might help with your situation. Since your wife's disability affects her cognitive abilities, you may want to look into whether your daughter qualifies for any disability-related scholarships or grants. Some organizations specifically provide funding for students whose parents have disabilities, recognizing the unique financial challenges families face. Also, when you do fill out the FAFSA, make sure to keep detailed records of everything you report - especially the asset values and any disability payments. If you need to make corrections later or file appeals, having good documentation will be crucial. The financial aid office at your daughter's school should be understanding of your complex situation, especially given the disability factors involved. One more thing - don't let the complexity discourage you from applying for aid. Even if the calculations don't work out perfectly in your favor initially, there are often additional opportunities for aid through the school itself, state programs, and private scholarships that might not consider all the same factors as the federal FAFSA.