There is a common misconception that the rules attached to Social Security Administration (SSA) disability programs do not allow disabled individuals and / or their families to save for a college education. While it is true that certain programs impose restrictions on earnings and assets, there are resources available that let you save for college without risking loss of your benefits.
There are two primary disability benefit programs offered by the SSA: Supplemental Security Income and Social Security Disability Insurance. Each one meets the needs of a specific applicant type and, accordingly, 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, with eligibility being determined by how many ‘work credits’ an applicant accumulated before becoming disabled. There is no means test or limit on resources, so SSDI recipients have always been free to 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, although it is important to remember that 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. As the name suggests, it supplements a recipient’s income up to a certain threshold. With children under 18, parental income and assets are taken into account when determining eligibility. 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. Because the program is means-tested, it imposes restrictions on both income and resources, with 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: ABLE Accounts, which were created by the 2014 passage of the ABLE Act, 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: If 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) and inputting it into a certain formula to generate a figure known as the Expected Family Contribution (EFC). The EFC is then compared to the anticipated cost of attending college to determine the amount of financial aid they are eligible for.
- 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 on a full or part-time basis does not affect your SSI disability status per se, so in most instances college students can continue to receive benefits as they work toward a degree. However, the SSA reviews all cases from time to time to check for improvement, and 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/, go to your nearest SSA office, or call 1-800-772-1213. Being disabled does not preclude you from the bright and rewarding future career that a college degree represents.
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