Many parents may not be familiar with the process for applying for, and qualifying for, financial aid for college. They may also not know which assets hurt their chances for receiving financial aid, and which do not.

Understanding the process is especially relevant, because parents are now able to begin filing for financial aid for the 2018-19 school year. The application period is October 1, 2017 to June 30, 2018.

There are two main documents used to apply for financial aid for college.

The most widely-used form is the Free Application for Federal Student Aid (or “FAFSA”), which millions of parents fill out each year to apply for federal and state financial aid, as well as institutional aid from the vast majority of public and private colleges and universities.

The CSS/Financial Aid PROFILE, which is a tool created by the College Board, is used by 229 schools, nearly all of them private, to determine who may be eligible to receive money from their institution. These schools only use the FAFSA to determine which of their students will qualify for state and federal aid.


Assets that are non-reportable on the FAFSA
The FASFA ignores a wide variety of assets. The primary ones that are non-reportable are:

Equity in the family home
The FAFSA doesn’t require parents to include equity in the family home. In fact, the document doesn’t even ask if the applicants own a primary home.

Retirement Assets
Applicants do not need to include include qualified retirement assets on the FAFSA. The instructions on the FAFSA are unfortunately somewhat unclear, and they don’t specifically say DO NOT include retirement assets on the form.

Qualified retirement assets that don’t get reported on the FAFSA include:
– Individual Retirement Accounts (IRAs)
– 401(k) accounts
– 403(b) accounts
– Roth IRAs
– Profit Sharing Plans
– Simple IRAs
– Pension plans

Annuities and life insurance
Applicants should also not include any annuities on the FAFSA. It does not matter whether the annuities are qualified (inside a retirement account, such as an IRA or 403(b) plan) or non-qualified.

Parents also do not need to report the cash value of any life insurance policies.

Household possessions
The value of cars, furnishings, jewelry and other household goods do not get reported the FAFSA.

Family farm/small business
The value of a family farm is excluded if the family resides there and materially participates in the operations. The value of a small business is ignored if it has less than 100 full-time employees and the family owns more than 50%.

Assets that are reportable on the FAFSA
The FAFSA does expect parents to provide information about their non-retirement assets. The most important ones to include are:

Savings and Investments
Reportable assets in this category include:
– Checking and savings accounts
– Certificates of deposits
– Savings bonds
– Taxable brokerage accounts
– Vested stock options
– Commodities

The value of these reportable assets should be based on the account balances at the time that the FAFSA is filed. It would be wise to print out account statements for verification.

Parents must also report the equity in a vacation home and investment properties. Resources for determining the equity value include online sources such as Zillow, Redfin and Trulia, as well as recent neighborhood sale comparisons or appraisals.

College Savings Accounts
Assets in 529 college savings accounts and Coverdell Education Savings Accounts are reported as the parents’ assets. However, a 529 plan owned by a grandparent, a non-custodial parent or anybody else other than the student or a dependent student’s custodial parent is not reported as an asset on the FAFSA.


The assets that the PROFILE ignores represent a much smaller list. Schools that use the PROFILE do not consider qualified retirement accounts in their aid calculations. They also don’t consider qualified annuities that are held inside an IRA, a 403(b) or other qualified retirement account. However, families must report assets that they hold in non-qualified annuities.

Some PROFILE schools will also consider the cash value in life insurance policies as an asset. As is the case for schools using the FAFSA, schools using the PROFILE require families to report their taxable assets, as well as college savings accounts. In addition, many PROFILE schools will count a portion of a family’s home in determining financial aid eligibility. The PROFILE also will assess the value of a family business or farm. Its formula, however, is proprietary.

Parents often overestimate the impact that their investments have on aid packages.

The FAFSA assesses parent assets at up to 5.64%, and the PROFILE assesses these assets at up to 5.0%. Effectively, this means that every $10,000 that a parent accumulates reduces eligibility for financial aid by no more than $564.

A student’s assets are assessed more aggressively for aid considerations.

A child’s assets would include money in checking/savings accounts that they own, as well as UTMA/UGMA accounts. Assets in a trust that designates the child as a beneficiary would also be counted, even if the child has no current ability to access the money.

The FAFSA assesses a child’s assets at up to 20%, and the PROFILE assesses these assets at up to 25%.