Will My Student Loan Refund Affect My Food Stamps and My Daughter's Medical Card?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

Most state welfare agencies maintain strict eligibility requirements for their participants. If you're currently receiving food stamps, medical assistance or other types of direct aid from your state's government, you may have to demonstrate that your annual income and assets fall below certain thresholds. If you earn too much money or have too many liquid assets on record, you may be unable to continue to receive some of the benefits to which you've become accustomed.

Before you take any steps that might temporarily increase your annual earnings or boost the size of your asset portfolio, you'll need to check with your state's welfare agency to ensure that you won't affect your benefits in the process. It's important to remember that reapplying for food stamps and medical cards often takes time and money. As such, you must make sure that your coverage remains uninterrupted during this period of financial upheaval.

In most states, you must have a paucity of liquid assets in order to claim eligibility for food stamps. These eligibility thresholds may vary according to local living costs and political policies. For instance, West Virginia's $2,000 threshold is far lower than California's $4,000 threshold. Since the means by which liquid assets are calculated vary by state, you'll need to check with your local welfare agency to determine which of your assets can be classified as "liquid." In most states, net worth metrics are also fairly important. If you technically own your own home but owe a substantial balance on its mortgage, this asset may not count towards your total net worth in a meaningful way.

If you're about to accept a student loan refund after graduating early or dropping out of school, your continued eligibility for food stamps will hinge on the anticipated size of the refund. Depending upon the number of unused credits for which you received your loan, you may be in line to receive $1,000 or more. If this is the case, it's likely that your food stamp eligibility will be affected.

You may be able to avoid reporting some of the income that you receive from your unused student loan funds. When your refund posts to your account, you might be able to use a portion of these funds to pay for everyday necessities like food and clothing. If you use cash to make these purchases, you may not have to claim the full amount of your refund on your annual income statement.

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