Structure Strategies

Student Avoids Losing Financial Aid

Amy, a 20-year-old student, was about to start her freshman year of college. She had just received a significant settlement from a car accident and needed to decide what to do with it. Upon her father's death earlier that year, Amy had also received a small death benefit and her father’s liquid assets. The amount she received would cover her first year at a small liberal arts university. The initial call to Ringler was to look at funding options for the next three school years.

Our first question was about her financial aid offer. Upon learning that Amy had not filled out the Free Application for Federal Student Aid (FAFSA), or in this case, the College Scholarship Service Profile (CSS), we assisted her in completing both. The next step was to utilize the net-cost calculators found on the university website and forecast possible awards given her situation. We could illustrate the impact on the award if the student owned significant liquid assets. We could also estimate what she would have been eligible for had she not lost her father. This analysis confirmed our view that she should not suffer another “loss” just because of the settlement.

After researching and designing a plan that matched Amy’s needs, we discovered she had more than enough money already in the bank to pay her share of all four years of school (not the one year she originally thought). The aid offer from the university was significant and would have been lost if the settlement went into a trust. After much discussion, Amy decided to put her settlement funds into an annuity designed to match her life goals rather than make riskier traditional investments. As you can see, the big picture includes a lot more than just interest rates.

(Note: While Structure Strategies is based on actual case histories, the names and images of the people involved have been changed to protect their privacy.)