NEW YORK (Money Magazine) -- Q: Our kids are 10 and 16. We expect to inherit $200,000, which we need for retirement. Can we still get financial aid for college? -- Name withheld
A: Yes -- but it'll be iffy the year after you receive the windfall.
You'll have to list the money as income on the FAFSA aid form (even though it's not counted as income on your taxes). And since the aid formulas weigh income far more heavily than assets, you'll probably be on the hook for full tuition that year.
Your best bet for snagging some bucks?
After you send your form to the schools, submit a request for a "professional judgment review." Include a brief letter to the financial aid administrator stating the inheritance is a one-time event that doesn't reflect your expected future earnings, and enclose a copy of the relevant estate paperwork, says Mark Kantrowitz, publisher of Fastweb.com and FinAid.org.
The good news is that the following year the money is considered part of your assets, which gives you a better shot at aid.
You can limit the impact a little more by fully funding a retirement account like a Roth IRA; the FAFSA formula doesn't count retirement savings.
Or use the money to cancel debt: Having a large credit card balance doesn't buy you a better aid package.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
Carlos Rodriguez is trying to rid himself of $15,000 in credit card debt, while paying his mortgage and saving for his son's college education.
Susan Carson and Laura DeLallo make $225,000 and have half a million in retirement savings, but their sprawling portfolios is proving hard to manage.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.84%||3.85%|
|15 yr fixed||2.96%||2.96%|
|30 yr refi||3.95%||3.96%|
|15 yr refi||3.06%||3.06%|
Today's featured rates: