FAFSA rejection after investing insurance money - Will rental property affect my son's financial aid?

sry about ur husband :( the fafsa is all about assets and income. even if u don't profit from the rental, the house counts as an asset. same with the investments. both will reduce his aid. majors don't effect federal grants at all btw

I'm very sorry for your loss. To answer your questions specifically: 1. Yes, both the investment account and the rental property will count as parental assets on the FAFSA, typically assessed at around 5.64% toward your Expected Family Contribution (now called Student Aid Index or SAI). The house equity and investment principal both count against you, regardless of whether you're profiting from the rent. 2. For the FAFSA, report everything accurately, but make sure you're using the proper asset protections. The FAFSA has an Asset Protection Allowance based on your age that shields some assets from counting. Also, retirement accounts are exempt, so if any investments could be moved to qualified retirement accounts, they wouldn't count. 3. Your son's major has no impact on federal grant eligibility. Pell Grants and other federal aid are based solely on financial need, not field of study. I'd recommend scheduling an appointment with the financial aid office at your son's school. They can often suggest school-specific scholarships or suggest professional judgment review if your circumstances have special considerations.

The system is SUCH GARBAGE for people like us!! I went through almost the exact same thing when my sister died and I became guardian for my niece. The FAFSA counted all the life insurance money against her even though it was literally paying for our survival! And don't even get me started on how they treat homes as "assets" when they're really NECESSITIES. I tried EVERYTHING with the financial aid office and they just kept saying "our hands are tied by federal rules" - meanwhile my niece is taking out maximum loans and working 30 hours a week just to afford tuition.

My son was in a similar situation and we disputed our FAFSA calculation through a process called "Professional Judgment Review." You need to contact the financial aid office at your son's school and explain your special circumstances - specifically that the rental property isn't actually generating income for you and that the investment proceeds are necessary for basic living expenses. Bring documentation showing that the rent only covers mortgage and HOA. Also, did your income significantly change since the tax year they're using for the FAFSA? If so, that's another basis for appeal.

have you looked in2 scholarships 4 kids who lost a parent? my friend got one after her dad died. also check if your husbands employer has any scholarships for families of deceased employees

I work in financial aid, and I want to address something important: calling your school's financial aid office directly can be extremely frustrating right now. The hold times are ridiculous (often 2+ hours), and many students/parents give up before getting through. I've had several students use a service called Claimyr (claimyr.com) to get through to financial aid offices and the Federal Student Aid office. They have a video demo (https://youtu.be/TbC8dZQWYNQ) showing how it works. Basically, it keeps your place in line and calls you when an agent is available. For your specific situation, you definitely need to speak with a financial aid counselor directly about a Professional Judgment review. They can make case-by-case adjustments for situations exactly like yours.

I know this isn't answering your immediate question, but have you considered looking into Dependent Education Benefits from Social Security? If your husband worked and paid into Social Security, your son might qualify for monthly benefits until he turns 18 (or 19 if still in high school). This wouldn't solve the FAFSA issue but might provide additional support. Also, the California Student Aid Commission offers Cal Grants that have slightly different eligibility criteria than federal aid. Make sure your son has completed the CA Dream Act Application too if you're California residents.

u should also look at css profile schools they sometimes give better aid packages for complicated situations like urs

After reading through the thread, I want to suggest a concrete action plan: 1. Contact your son's financial aid office for a Professional Judgment review - bring documentation of your current income, the rental property expenses, and explain how the investments are being used for essential living expenses. 2. Look into CSS Profile schools for next year if transfer is an option - they often have more institutional aid for complex situations. 3. Make sure your son has completed the California Dream Act Application for state-specific aid. 4. Have your son visit the school's scholarship office (separate from financial aid) - they often have databases of private scholarships including ones for students who have lost a parent. 5. Consider meeting with a financial advisor who specializes in college planning to see if there are ways to restructure your assets to improve aid eligibility for next year. Don't give up - I've seen many families in similar situations find solutions through persistence and exploring multiple avenues.

I'm so sorry for your loss. As someone who works with families navigating financial aid after losing a spouse, I want to emphasize that you're not alone in feeling overwhelmed by this process. One thing I haven't seen mentioned yet is appealing to your state's higher education assistance authority. California has additional programs beyond Cal Grants that might help. Also, if your son is attending a California Community College, they often have emergency financial assistance funds specifically for students facing hardship. Another avenue to explore: many colleges have partnerships with local organizations that provide emergency grants or scholarships. The financial aid office should have information about these, but sometimes the student success center or dean of students office knows about additional resources. Finally, document everything about your financial situation with dates and amounts. This will be crucial for any appeals process and can help demonstrate that while you technically have "assets," your actual available income is much lower than what the FAFSA calculations suggest. Keep pushing forward - the system is complicated, but there are often solutions hiding in places you haven't looked yet.

I'm really sorry for your loss and what you're going through. One thing I want to add that might help immediately - if your son's school participates in the Federal Work-Study program, that income doesn't count against next year's FAFSA the same way other student income does. Even if he didn't qualify this year, it's worth asking if there are any work-study positions still available or if he can get on a waitlist. Also, since you mentioned you're renting out the family home, make sure when you report it on the FAFSA that you're only reporting the NET equity (market value minus what you still owe), not the full property value. And if the property has depreciated since your husband's death, you might want to get a current appraisal. One more thought - some schools have "emergency aid" or "crisis grants" that are separate from the normal financial aid process. These are typically for unexpected situations and might be worth asking about given your circumstances.

I'm so sorry for your loss and the stress you're dealing with. As a financial aid counselor, I want to add a few points that might help: First, definitely pursue the Professional Judgment review that others mentioned - but when you do, emphasize that your investment withdrawals are for basic living expenses, not discretionary spending. The fact that you're using them to help with your son's housing costs actually strengthens your case since it shows the money is going toward educational expenses. Also, consider having your son file as an independent student if he meets any of the criteria (age 24+, married, has dependents, etc.). If not, there's also something called a "dependency override" for unusual circumstances, though it's harder to get approved. One strategy for next year: if possible, consider paying down any debts or prepaying expenses before the FAFSA snapshot date. This can reduce your reportable assets without actually reducing your financial security. Finally, many states have their own grant programs with different eligibility rules than federal aid. California's Middle Class Scholarship program, for example, might be worth looking into even if you didn't qualify for other aid. Don't give up - I've seen families in very similar situations find pathways to make college work.