by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
Sell Structured Settlement Payments to Pay for College
Yea or Nay?
Selling your structured settlement to help pay for college is probably not a good idea. It could seriously impact your ability to get financial aid. Here’s why.
When you fill out the FAFSA form to try to get approval for financial aid, you will need to declare 20% of assets in the dependent student’s name is part of the expected family contribution. The Expected Family Contribution or EFC, is a number used to calculate the amount of federal student aid you are eligible to receive. For example, if you have a lump sum in the dependent student’s name of $50,000, this alone will reduce eligibility for need-based financial aid by $10,000.
Why pay for college with money after you have had to take a big capital loss and negatively impact financial aid?
Consider This
- 1. You have to do the math
- 2. Work with a licensed and credentialed financial professional
- 3. Perhaps it makes sense to maximize your student loans and scholarships, wait for the structured settlement payments and THEN pay off the loans with undiscounted dollars.
Novation Settlement Solutions has to have known the Buyer Friendly and Seller Unfriendly economics of the deal as the assignee of the Periodic Payments
In a recent deal approved October 30, 2015, in Okeechobee Florida, Novation Capital and another company ,a DBA that does not come up much on the radar, 365 Advance Services, participated in what has to be one of the worst deals for a structured settlement seller ever.
The deal I’m referring to had in excess of a combined $1.4 million mark up on a naive 21 year old young adult, also from New York. This means that the seller could have and should have received $1.4 million more. If Novation Solutions is going to participate in a deal such as that, why would you ever trust Novation Solutions’ daily “Tweet Fest’ to advise you in what is in your best interest concerning paying for college?
Related Reading
You’ve Got a Structured Settlement: Tips for Teens – Structured Settlements 4Real®Blog
The Financial Maturity of Young Adults and Settlement Money – Structured Settlements 4Real®Blog March 10, 2014
Safeguards for Settlement Recipients in New York – Structured Settlements 4Real®Blog July 1, 2013
Structured Settlement Annuitant Wants Protections Until Age 25 – Structured Settlements 4Real®Blog