There’s one common misconception about the rules attached to Social Security Administration (SSA). People assume disability programs do not allow disabled individuals and / or their families to save for college. It is true that certain programs impose restrictions on earnings and assets. But, there are ways for you to save for college without losing of your social security disability benefits benefits.
The SSA offers two primary disability benefit programs. One is the Supplemental Security Income. The other is the Social Security Disability Insurance. Each one meets the needs of a specific applicant type and treats larger assets like college funds differently.
Social Security Disability Insurance (SSDI) vs. Supplemental Security Income (SSI)
SSDI is a disability program intended for disabled workers and their families. How many ‘work credits’ an applicant accumulated before becoming disabled determines their eligibility. There is no means test or limit on resources. SSDI recipients can set aside money for future educational expenses without risking their benefits. Auxiliary benefits paid to children under 18 or adult disabled children of parents who receive SSDI are also not affected. However, benefits for non-disabled children end after they graduate from high school or two months after they turn 19- whichever comes first. Additionally, adult children with a disability may qualify for disability benefits after the age of 18 if a parent is receiving SSDI benefits or Social Security retirement benefits.
SSI is a program that pays monthly benefits to those with low incomes and limited assets, such as disabled children or the elderly. It supplements a recipient’s income up to a certain threshold. Eligibility with children under 18 take into account parental income and assets. After the age of 18, a child may qualify on their own for SSI, even while attending college.
When it comes to saving for college, SSI presents certain challenges. It imposes restrictions on both income and resources because it’s a mean-tested program. There is a limit of $2,000 for a single person and $3,000 for a couple. Fortunately, there are certain resource exclusions that permit SSI recipients to save for post-secondary education without losing their benefits.
Resource Exclusions for College Funds
- ABLE Accounts: The 2014 ABLE Act created ABLE Accounts. It permits eligible individuals and their families to set up tax-advantaged ABLE savings accounts that will not affect their eligibility for public benefits such as SSI and Medicaid. If an individual became disabled before 26 and currently receives SSI or SSDI benefits, they are eligible to set up an ABLE account.
- Special Needs Trusts: Let’s say you are an SSI recipient and someone gives you (for example) $15,000 to pay for college. That gift could disqualify you from further benefits due to the value limit on assets. A Special Needs Trust allows your benefactor to leave the money in a trust instead of giving it directly to you. Since you have no control over the funds, the trust property will not affect your SSI eligibility.
- Pell Grants: These grants are intended for those in financial need. The U.S. Department of Education determines eligibility by taking the applicant’s financial information (e.g. family income). They then input it into a certain formula to generate the Expected Family Contribution (EFC). They compare the EFC to the anticipated cost of college to determine the amount of financial aid.
- Other Sources: Financial assistance received under Title IV of the Higher Education Act are also not treated as either income or resources for SSI purposes. They include the Federal Family Education Loan, the Federal Perkins Loan, the Academic Competitiveness Grant, National SMART Grant and the Federal Supplemental Educational Opportunity Grant.
Receiving SSI While in College
Attending school full or part-time does not affect your SSI disability status per se. In most instances, college students can continue to receive benefits as they get a degree. However, the SSA reviews all cases from time to time to check for improvement. Full-time college attendance could affect your disability status, especially if you were approved for SSI on the basis of a mental impairment.
For more information about receiving SSA disability benefits while attending college, please visit the SSA website at https://www.ssa.gov/. You can also go to your nearest SSA office, or call 1-800-772-1213. A disability does not preclude you from the bright and rewarding future career that a college degree represents.
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