What Assets Are Reported on the FAFSA?

The Free Application for Federal Student Aid (FAFSA) helps students seek financial assistance for higher education. Its purpose is to collect financial information from applicants and their parents to assess a family’s ability to contribute to college costs. This assessment determines eligibility for various forms of federal student aid, including grants, scholarships, work-study programs, and federal student loans. The FAFSA connects students with financial support to make college more accessible.

Assets to Include on FAFSA

The FAFSA requires reporting specific asset types to provide a clear picture of a family’s financial standing. This includes balances in cash, savings, and checking accounts, reported as a combined total for both the student and parents as of the day the FAFSA is filed. For dependent students, parent assets are a component of the financial assessment.

Various investments also require disclosure. These include non-retirement stocks, bonds, mutual funds, exchange-traded funds (ETFs), certificates of deposit (CDs), and money market accounts. Trust funds must also be reported as assets if accessible to the student or parent. These investment values are reported for both the student and parents.

Real estate holdings, excluding the family’s primary residence, are another category of reportable assets. This encompasses equity in investment properties, rental properties, and undeveloped land. For dependent students, Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts are considered student assets and must be reported.

Reporting requirements for businesses and farms depend on their size. For tax years beginning in 2024-2025, the FAFSA no longer distinguishes based on the number of employees; all business and farm assets must be reported. This change means that even small businesses and family farms previously exempt may now need to include their net worth.

Educational savings plans, such as 529 plans and Coverdell Education Savings Accounts (ESAs), are reported as parent assets if owned by a parent for a dependent student, even if the beneficiary is a sibling. If the student is independent, these accounts are reported as student assets.

Assets Not Included on FAFSA

Knowing which assets are excluded from FAFSA reporting helps families avoid unnecessary reporting. The family’s primary residence is not reported on the FAFSA.

Qualified retirement accounts are not factored into the FAFSA asset calculation. This includes funds held in 401(k)s, 403(b)s, traditional IRAs, Roth IRAs, pensions, and Keogh plans. While these account balances are not reported as assets, voluntary contributions made to them during the base tax year may be reported as untaxed income.

The cash value of life insurance policies is not reported on the FAFSA. Personal possessions such as cars, clothing, furniture, and collectibles are not considered reportable assets. Health Savings Accounts (HSAs) and ABLE accounts are also excluded from FAFSA asset reporting.

Prepaid tuition plans are not reported as assets if owned by the student, but if a parent owns a 529 prepaid tuition plan for a dependent student, it is reported as a parent asset. Assets held by relatives other than a parent, such as a grandparent, are not reported on the FAFSA.

Reporting Asset Values

Accurately reporting asset values on the FAFSA requires attention to specific guidelines. Asset values should reflect their worth as of the day the FAFSA is filed, not an average over a period. Families should gather their financial statements close to their filing date.

Applicants report the current market value of an asset, which is what the asset would be worth if sold today, rather than its original purchase price. For assets like investments or rental properties, the net worth is reported. This is calculated by subtracting any outstanding debt specifically tied to that asset from its current market value. If the net worth of a specific asset is negative, it should be reported as zero.

The FAFSA has designated sections for entering these asset values, such as specific lines for cash, savings, checking accounts, and investments. Maintaining documentation to support all reported values is important. This documentation ensures that if an applicant’s FAFSA is selected for verification, they can provide proof of their reported financial information.

How Assets Affect Financial Aid Eligibility

Assets reported on the FAFSA contribute to the calculation of the Student Aid Index (SAI), a number colleges use to determine eligibility for financial aid. A lower SAI indicates a greater financial need, potentially leading to more need-based aid. The SAI is derived from various financial data points, including both income and assets.

Historically, the FAFSA included an asset protection allowance that shielded a portion of assets from the calculation. For the 2024-2025 and 2025-2026 academic years, this asset protection allowance has been reduced to $0. This change means a larger portion of reportable assets may now be considered available for college expenses.

The FAFSA assesses student-owned assets at a higher rate than parent-owned assets. Student assets can be assessed at a rate of 20%, while parent assets are assessed at a maximum rate of 5.64%. This difference means funds held in a student’s name have a greater impact on reducing financial aid eligibility compared to the same amount held by a parent.

For many families, especially those with moderate asset levels, the overall impact of assets on financial aid is limited. Assets represent just one component of the financial aid calculation, which also heavily considers income. The FAFSA also has income thresholds that can exempt some applicants from asset reporting entirely.