Landing Financial Aid
- Key Points to Consider When Considering Financial Aid
- Financial Aid Application Process
- Ways to Minimize Income during "Base Year"
- Effect of Assets on Financial Aid
- Financial Aid Suggestions
Effect of Assets on Financial Aid
Financial aid is usually based on need. The more assets and income you have, the less financial aid you will receive. However, having assets in your name instead of your child's name could mean that you receive more financial aid. The financial aid formula assumes that a parent has to use 5.6% of their assets to pay for college and a child has to use 20% of their assets—a much higher percentage. (Parents' assets may be disregarded for federal aid purposes if adjusted gross income falls below a certain amount.)
IMPORTANT NOTE: All assets are reduced by the amount of the qualifying loans against them.
SUGGESTION: Using retirement accounts to save for retirement will help you when you apply for financial aid. These accounts are not considered assets for the federal financial aid calculation.
IMPORTANT NOTE: Contributions to retirement plans (excluding Defined Benefit Plans) are added back to the FAFSA formula for determining financial aid eligibility.
SUGGESTION: Consumer debt (credit cards, car loans) does not reduce the amount of your assets for the calculation. This is yet another reason not to run up consumer debt. The value of your home is not considered an asset for federal financial aid purposes.
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What Are Assets for Financial Aid Purposes? |
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Cash |
Checking accounts |
Savings accounts |
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Certificate of deposit (CD) |
Stocks |
Bonds |
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Mutual funds |
Trusts |
Money market funds |
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Ownership interest in businesses |
Investment Real Estate |
Education Savings Accounts (child's assets) |
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Qualified Tuition Plans |
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What Are Not Assets? |
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Your Personal Residence |
401(k), 403(b), or 457 Plans |
Keogh Account |
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IRAs |
Other Retirement Accounts |
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Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. First Community Financial Consulting is a trade name of Pennian Bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. NOT FDIC INSURED BY ANY FEDERAL GOVERNMENT AGENCY, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.
