Parents want the best for their kids and that includes giving their children the opportunity to attend college. When a parent is seriously injured and no longer able to work, hopes of providing a college education for their children can be dashed. Funds from a structured settlement due to an injury, however, can be designated for children’s college tuition and other educational expenses.

How Much Will College Cost? When setting up a structured settlement with future college tuition costs in mind, the first issue to tackle is determining the actual costs involved. One way is to go to sites such as This and other sites provide a quick calculation of educational costs at specific schools.

Factoring In Student Aid. As part of the settlement, parents can direct that their child receive periodic payments during their child’s college years and/or a lump sum payout when the child turns 18. The payments can be timed for tuition payments, books and fees as well as monthly living expenses. Virtually all state and private schools look at the financial needs of prospective students and rely on completed Free Application for Federal Student Aid forms (FAFSA) as the starting point for their assessment.

If a child receives a lump sum payout from a settlement on his or her 18th birthday, the money may be problematic when it comes to qualifying for college financial aid. Having say, $50,000 of settlement funds appear in the student’s savings account would make it unlikely that the student would qualify. Instead, families can elect to spread out settlement payments over time (i.e., on the student’s 18, 19, 20 and 21 birthdays).

Delaying Payments. Another way to use settlement funds for education and still possibly qualify for financial aid is to delay any college-targeted settlements payments until after the student graduates. That way, payments don’t affect student aid eligibility and the settlement funds continue to grow for an additional four years. Once funding is received after graduation, the money can be used to pay off student loans.

Feel free to contact me with questions about using structured settlement funds to pay for college costs.


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