Assets that affect Financial Aid for U.S. Colleges

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Assets that affect Financial Aid for U.S. Colleges

by | Dec 8, 2016

Many of our parents and grandparent clients are hoping financial aid will be available to defray the ever rising cost of tuition for college.  Yet, it is often confusing which type of assets influence their qualification for financial aid.  The following is a quick summary of the assets guardians must disclose when completing the two top financial aid documents.

The most common is the Free Application for Federal Student Aid (FAFSA) for the vast majority of public and private colleges.  The less common CSS/Financial Aid PROFILE, is currently used by 229 institutions, most of them private.

There are a surprising number of assets that are non-reportable by FAFSA;

  1. Equity in the Family Residence
  2. Retirement Accounts: including IRAs, 401(k)s, 403(b), SEP, Simple, Pension Plans etc.
  3. Life Insurance Cash Value, whether or not in a qualified retirement plan.
  4. Household valuables such as cars, antiques, art, jewelry etc.
  5. Family Farm or small business if it has less than 100 full time employees and the family owns more than 50%

Reportable FAFSA Assets:

  1. Checking/Savings Accounts
  2. Vested Stock options
  3. Savings Bonds
  4. CD’s
  5. Taxable Brokerage Accounts
  6. Real Estate Property- the Equity in a vacation home or investment properties- Apparently there is not an official source to verify values but using an online estimator like Zillow, neighborhood comps would suffice.
  7. College Savings Accounts: Assets in 529 savings accounts and Coverdell Education Savings are also reportable. But 529 plan distributions receive favorable treatment. Qualified distributions from a student-owned or parent-owned 529 account to pay for this year’s college expenses are not included in the “base-year income” that reduces next year’s financial aid eligibility.


Non-Reportable assets in these applications do not include qualified retirement accounts
Reportable Assets:

  1. Some schools consider cash value of life insurance, equity in the family residence
  2. Also a few will assess the value of a family business or farm.  Their formula is a black box determinable by only their calculators.

Since this has been a confusing issue, many (grand) parents have not pro-actively set college savings goals and accumulated sufficient assets for the dramatic rise in tuition costs.   Parent’s assets (including 529 plan assets) are only assessed at 5.64% for FAFSA applicants and the PROFILE assesses them at up to 5%. Every $10,000 a parent accumulates will reduce eligibility for financial aid no more than $564.  However, student owned accounts are treated more severely (20% for FAFSA, 25% for PROFILE) including money markets, savings, including UTMA/UGMA accounts.  Also, trust accounts titled in their name or as beneficiary would also count even if they do not have current access. 

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Fleishel Financial Associates is an Independent Registered Investment Advisor. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC


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