Should a Family with a Trust Fund Fill out the FAFSA?

Question: My father left money in trust for my daughter’s education. There’s enough to cover one–maybe two–years at a private college. Income is less than six figures, but we do have some investments. Any reason we should do the PROFILE and FAFSA?

When a student applies to college as a “No Need” candidate (i.e., he or she does not ask for financial aid) then there is usually a waiting period (typically two years but it can be longer) before the student can apply for aid. Thus, if you might have only enough money from your father’s trust to cover one year of your daughter’s college, then you should definitely go through the hassle of completing the FAFSA (and the PROFILE where required. Also some colleges have their own forms, too).

Even if you don’t get any aid for her first year due to the trust fund, this would leave the door open for an aid application for her sophomore year, as required. If your income is less than six figures, you will likely qualify for need-based aid, depending on the extent and nature of your investments. If your daughter is applying to any colleges that don’t require the PROFILE, then her odds of getting aid are even better (This will vary by school. PROFILE colleges are generally the ones with the most dough to give away, but a number of FAFSA-only colleges have good aid, too–especially Merit Aid.) Also, by completing the FAFSA, you may be eligible for some loans that you could not get without it.

So my advice would be to bite the bullet and do the forms. Most folks say that they’re not as bad as they expected (which is the same thing I say about my family Thanksgiving every year … though last year was pretty bad. 🙂 )