Do you feel that over the long term it is helpful or hurtful to the family to create a situation where they are stuck with a FS income?
A friend with a large family discussed his situation with me. He felt that his dependence on government programs his hindering his mentality and trapping him in his situation.
We put down on a spreadsheet all his expenses (including those covered currently by programs and grants), and then all sources of income (including programs and grants).
We then started to examine how would various increases to his income affect his lifestyle.
Here were some of the things we learned:
1. He was extremely lucky to buy his house when he bought it, and subsequently get a mortgage modification, or else it would be close to impossible.
2. He is extremely lucky to legally qualify for something called Qualified Tuition Reduction.
3. In order to maintain the same (modest) lifestyle without all the non-taxable benefits (Medicaid, Pell Grants, QTR) he would have to earn about double what he currently earns (counting the QTR as current income, even though it is not considered such by the IRS, and is therefore not taxed).
The exercise was eye opening, and he realized why his neighbor is STRUGGLING on an income of $300k!
After running the numbers, he decided that he is comfortable earning more, to the extent that will drop him off FS rolls, but would still qualify him for a full Pell grant for his children (and for Medicaid, based on his income and family size).