When Grandma Moves In, Does It Help or Hurt Financial Aid Eligibility?

Mark Kantrowitz

April 26, 2010

Grandma is moving in with her Social Security check. Does this help or hurt my FAFSA results? Does her Social Security check count towards my parents’ income on the FAFSA? — Doreen Y.

The answer is complicated and depends on whether Grandma receives the Social Security benefits in her own name or whether they are received by your parents on her behalf. The answer also depends on whether Grandma may be counted in the household size.

Grandma may be included in household size on the FAFSA only if your parents provide more than half her support and will continue providing more than half her support during the award year. Support can include money, gifts, loans, food, clothing, housing (fair market rental value of the accommodations they are providing her), and medical and dental care.

If Grandma’s Social Security benefits are paid to her, they count as part of her own support and are not reported on the FAFSA.

If Grandma’s Social Security benefits are paid to your parents, they count as part of the support your parents provide to Grandma. If she is included in household size and the benefits are paid to your parents, the taxable portion of the benefits are included in your parents’ adjusted gross income. (The tax-free portion of Social Security benefits are no longer reported as untaxed income on the FAFSA.)

If Grandma’s Social Security benefits are paid to your parents, it will reduce your eligibility for need-based financial aid. If Grandma is counted in household size on the FAFSA, it will increase your eligibility for need-based financial aid.

Note that any support that Grandma provides to you, the student, is counted as untaxed income to you on the FAFSA and will reduce your eligibility for need-based financial aid. Any support that Grandma provides to your parents, however, is ignored on the FAFSA.

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