What is more important on the FAFSA, income or assets?
As part our College Q & A guide, we decided to ask your questions to the experts. Here are their answers.
Todd Weaver, Senior Advisor, Strategies for College, Inc.
Income far outweighs assets in terms of the percentage that the formula’s use to determine a student and family’s need-based aid eligibility. Far too often, families are scared that their assets (cash, 529 plans, home equity, etc.) are going to negatively affect how much financial aid their student may be eligible for. The reality is that a family’s income is assessed at 47%, after allowances, and the parent assets are only assessed at a maximum of 5.64% after allowances. BIG difference! Student income and assets are a different story. Colleges and the Federal Government believe that a student should use their income and savings for college, since it is their own education, after all! There are smart ways to do that, though. Thoughtful consideration of where the money is held is key to developing a plan for paying for college. More can be learned on my blog: www.collegesearchgameplan.com for free.
Neimeyer CEO/Partner Global College Search Associates, LLC
It all depends on the amount of income and amount of assets. Usually, if the adjusted gross income (1040 Line 37) is less than $45,000, a family will receive a Pell Grant. However, if there are substantial assets of say $100,000 or more, it will preclude them from receiving substantial need-based aid. There are too many variables for a simple answer – they’re both important.
Aresty College Admissions/Financial Aid Expert & Author Payless For College, Inc.
It really depends on many factors. For instance, a portion of your parents assets are protected for retirement based on the age of the older parent. So depending on the income, the amount of assets we are talking about and the age of the parent, either could be the bigger contributing factor in determining what the family is able to contribute toward the cost of education or rather their Estimated Family Contribution (EFC).