do parents assets affect financial aid

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Parents frequently assume that their assets will wreck their chances for financial aid. Fortunately, parental fears about their investments are usually worse than reality. You can become a hero to your clients if you can explain the real story behind the role that assets play in their financial aid determinations.

People also ask


  • How do student assets affect financial aid eligibility?

  • A student鈥檚 assets will have a far greater impact on a family’s eligibility for financial aid than parents鈥?assets. An asset is essentially any money that you have readily available or something that can provide financial benefits in the future, such as property or stocks. Student’s assets count for more.

  • What counts as parental assets on the FAFSA?

  • Funds in 529 plans and ESAs owned by a dependent student or one of their parents are counted as parental assets on the FAFSA. Only up to 5.64 percent of a parent鈥檚 assets are considered available funds to pay for college, compared to 20 percent of a student鈥檚 assets.

  • Why do parents transfer assets to their child?

  • Because assets that belong to the student have a higher impact on financial aid eligibility (a student鈥檚 asset will increase the EFC by 20 percent of the asset鈥檚 value, as opposed to 5.64 percent of a parent鈥檚 asset), some families transfer assets owned by a child to a parent.

  • How does parental savings count toward financial aid?

  • Parental assets are calculated at up to 5.64% through the Free Application for Federal Student Aid (FAFSA). That means of $10,000 in savings, approximately $564 (or less) would be counted toward the EFC, potentially reducing a financial aid package by $564 (or less).

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