3 Financial Aid Facts for Families of People with Disabilities

Posted by Haddad Nadworny on Wed, Jun 12, 2019 @ 06:00 AM

The Special Needs Financial Planning Team at Affinia Financial Group John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | Alexandria Nadworny,  CFP, CTFA

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Filing FAFSA, filling in a College Scholarship profile or just finding out all you can about student debt forgiveness programs? Here is some information specific to ABLE Accounts, Special Needs Trusts, Social Security Benefits and the student loan process. 

Before we get started, a special shout-out to Mary Rubenis of the Massachusetts Educational Financing Authority (MEFA), sponsors of the Attainable Savings PlanSM  for contributing her insight and key  information. 

A Little Background Info about the ABLE Account & Special Needs Trusts:

The ABLE (or 529A) account is a tax advantaged account for individuals with a disability to pay for qualified disability expenses.  Unlike a typical 529 plan which requires funds be spent on qualified higher education expenses, the funds in an ABLE account may be used to pay for qualified expenses related to living with a disability. Qualified disability expenses may include education, transportation, housing, employment training and support, personal support services, health, basic living and assisted technologies and related support.

As of 2018, it is allowable to rollover up to $15,000/year from a beneficiary’s 529 account into their own or their family member’s ABLE account without penalty.  To read about the basics of the ABLE account, as well as suggested strategies and case studies that use the ABLE, click here

 A Special Needs Trust (SNT), also called a supplemental needs trust, is a vehicle to provide monetary support for a beneficiary without effecting their eligibility for needs-based government benefits, e.g. Social Security Income and Medicaid.  The beneficiary will not have access or control over the money in a SNT.

3 Financial Aid Facts

1. Reporting requirements for Free Application for Federal Student Aid (FAFSA)

FAFSAGuidance from the Federal Student Aid Office states that ABLE accounts, along with interest income and distributions, should be excluded as assets on the beneficiary’s FAFSA. ABLE accounts were created to supplement, and not to replace, eligibility for federal means-tested benefit programs. ABLE accounts would also not be reported on a sibling’s FAFSA, as the assets are considered those of the beneficiary, not the parents.

SNTs are treated as any other trust fund for the purposes of FAFSA and need to be reported. Restrictions on distributions from a SNT are imposed by the grantor of the trust and unless specifically excluded, these funds may be dispensed by the trustee to pay for educational expenses for the beneficiary.  The assets in the SNT are not included on the beneficiary’s siblings’ FAFSA.

Social Security benefits that are not subject to taxation do not have to be included on FAFSA. SSI recipient’s income levels are generally below the taxable threshold, so SSI generally does not need to be reported. If you receive SSDI and have substantial income, your benefits may be taxed at the federal level. For example, if you are single and your income is more than $25,000 per year but less than $34,000, you would have to pay taxes on about half the value of your benefits. If you earn more than $34,000 (or married and earn more than $44,000), 85% of your benefits could be taxed.

2. Reporting Requirements for College Scholarship Service (CSS ) Profile

The Federal Student Aid Office has not yet provided guidance on reporting assets in a SNT or ABLE. Currently, the CSS/Financial Aid Profile does require reporting the assets of siblings and may require the disclosure of assets in a SNT and ABLE.  In these circumstances, families should give details of how these funds are used in the special circumstances section of the application and ask each college for a professional judgment review.  While some financial aid departments will ignore the assets in the trust, most will not.  They may however, consider the high costs of dependent care when making their grant determinations.

3. Student Loan Repayment

student-loan-debt-1160848_960_720If their student loan covers a time period during which the individual had an ABLE account open, repayment may be considered a Qualified Disability Expense and be paid from the ABLE.

If you become totally and permanently disabled (TPD), you may qualify for a TPD discharge of your federal student loans.  Refer to DisabilityDischarge.com for more information. 

Also, If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program. Refer to StudentAid.ed.gov for more information.


MEFA, Massachusetts Educational Financing Authority

Fidelity Investments, Attainable Savings Account




Content in this material is for general information only and  not intended to provide specific advice or recommendations for any individual,  nor intended to be a substitute for specific individualized tax or legal advice.  We suggest that you discuss your specific situation with a qualified tax or legal advisor. 

Prior to investing in an ABLE or 529 account investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s ABLE program.  Withdrawals used for qualified disability expenses are federally tax free.  Tax treatment at the state level may vary.

Investing involves risk, including loss of principal.



Tags: transition planning, Special Needs Trusts, planning for college, ABLE Account, FAFSA, Planning for college with disabilities

Keeping the I in IEP

Posted by Patricia Manko on Tue, Sep 03, 2013 @ 11:56 AM

IEPWhen James moved from Early Intervention ( EI) services to the public school system, it felt like we had moved from a cruise ship to a dinghy.  We had so appreciated the services coming to our home and the family centered approach of EI.  Our opinions, schedules and plans for James mattered.

When he entered the school system, our experience was very different.  The IEP team immediately directed us to a segregated classroom for James.  We knew that he belonged with his typical peers.  We needed the teachers to support us in our vision for James.  What we always tried to do with James was to surround him with people who thought he had limitless potential.  If they looked at only his diagnosis, they would deny him of opportunities we thought he should have.  We had to work to create a team of "believers".

We continue to search out believers and people who can journey with us and imagine the possibilities.  James continues to surprise us and remind us that his potential is limitless.

-Susan, James's mother

When your child reaches age 3, the family's first experience with transition will occur. You will be introduced to the educational system, and your child will need to be determined eligible to receive services through an individualized education program, or IEP. Schools will be making assessments and recommendations with important implications for your child. The parent's role is critical in working to coordinate with educators and service providers to set measurable goals and objectives for their child. Thus begins your journey of educational advocacy and understanding your roles and rights in the process, as well as the various programs, services, and supports schools may offer your child.

Just as every child is unique, the way each parent approaches their planning is unique. Below are a few basic planning points that are unique in planning for your child from age 3 to age 15. (These steps are in addition to the comprehensive Planning Points outlined in our book, The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child's Life, Brookes Publishing 2007.)

Planning Points

 ~ Learn as much as possible about your child's diagnosis.

 ~ Build and maintain relationships with physicians, schools, therapists, teachers, provider agencies, and your neighborhood community.

 ~ Register with your local police and fire departments, and let them know you have a child with special needs living in your home. Obtain and complete a child's identification kit, and include a current picture.

 ~ Get to know your state's laws on public education; make sure you have a clear understanding of your child's entitlements and your rights and responsibilities as the parent.

 ~ Check your local school and provider agencies for parent support groups, educational workshops, and/or parent advisory councils.

 ~ Make sure that your budget includes family vacations, evenings out, time away, and activities that you enjoy.

 ~ Review you current financial and estate plan at least every 3 to 5 years, as well as any time your situation changes.

Some resources that may be helpful at this stage:

fcsn.org Federation for Children with Special Needs

mfofc.org Massachusetts Families Organizing for Change: Leadership series

spanmass.org SPaN Special Needs Advocacy Network

We have been there both personally and professionally. We can help.

Tags: transition planning, Special Needs Planning Timeline

Special Needs Checklist for Your Child: Age 16-22

Posted by Patricia Manko on Wed, May 29, 2013 @ 04:12 PM

person centered plan resized 600

At age 16, your son or daughter is probably established in an appropriate school setting, and you have worked to help develop appropriate social connections. Now is the time to think ahead to the day your young adult turns 22, when the bus no longer arrives to take him or her to school. What do you want that day and the days after that to look like? What does your young adult child need to succeed? This is the stage where you should be focusing on the future and what you want that future

Just as every child is unique, the way each parent approaches their planning is unique. Below are a few basic planning points that are unique in planning for your child from age 16 to age 21. (These steps are in addition to the comprehensive Planning Points outlined in our book, The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child's Life.)

 ~ Your child's abilities may be more defined by this stage, and you may be able to have a glimpse of his or her future abilities as well.

 ~ Now is the time to explore options and alternatives for when your child reaches the age of 21 or 22 (the age at which your state no longer provides public education services). This is called transition planning, and focuses on residential and vocational opportunities for your child when he or she reaches adulthood.

 ~ Get involved in any person-centered planning programs that may be available to your family.

 ~ Obtain eligibility information for any and all government agencies in your state that may potentially provide funding and services for your child after turning age 22.

 ~ Interview and ultimately identify the most appropriate agency to provide residential and/or vocational services based on your child's abilities. Vocational services may also include a day program for your child to attend, again depending upon his or her abilities.

 ~ If you feel that your child will not be able to make decisions on his or her own behalf upon reaching age 18, you should consider the possibility of filing for guardianship (see our previous newsletter on guardianship and less restrictive alternatives).

  ~ Prepare your child to financially qualify for SSI and/or Medicaid benefits. This means that assets in his or her name, including custodial accounts, should be less than $2000 (or the current asset limits).

 ~ In the event that your child's assets are in excess of the limit and he or she would not financially qualify for SSI and/or Medicaid, you should contact a CFP® and an attorney knowledgeable in government benefits eligibility, to discuss options of spending down the assets or transferring them  to a special needs trust (OBRA'93 Payback Trust or d4(A) Trust) prior to applying for benefits.

 ~ Assess your overall financial situation to help determine your ability to achieve your financial goals, including college funding for other children, financial requirements to fund the supplemental needs of your child with disabilities, and your own retirement goals.

 ~ Review your estate planning documents to be mindful of estate tax planning considerations, ownership and beneficiary designations of assets, retirement plans, and life insurance policies.

 ~ Talk to your other children about your plans and your vision for your child with special needs; they may have input to share as well.

 ~ Communicate with extended family members, including grandparents, aunts, uncles, and other friends and relatives, who may be interested in transferring wealth to you and your child. Tell them that you are in the process of planning for your child's future security.

 This is the ideal stage to begin planning for the future for your child. You still have time to make changes and to explore options if you have not done so already.  This would be the ideal time to hire an independent consultant, if you have not already done so.

Click here to access Checklist for Interviewing  a Financial Advisor

Tags: transition planning, Special Needs Planning Timeline

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