The FAFSA’s asset protection allowance is pretty low– about $19,000 for married parents or $11,000 for single parents, and zero for students. (See page 19 here for exact amounts.) What goes in that? For most people, the biggest ones are any non-retirement savings accounts including 529 plan accounts, the balance in your checking account and the net value of any investment property you own (property’s market value less any attached debt).
At this point, there aren’t any really big steps you can take to reduce that number that don’t leave you in worse shape relative to overall college affordability, but there are some smaller adjustments available to you.
First, remember that assets are valued on the day you file the FAFSA. Look at your regular deposits and withdrawals– salary deposits, mortgage payment, credit card payments– and figure out which day(s) your account balance is likely to be lowest. Make your big payments before you file the FAFSA to bring your account balance down. Likewise if you have any significant purchases you intend to make– for which you intend to pay cash– now is the time to do it. (The balance on your credit card is not subtracted from your assets so purchasing something on your card doesn’t help unless you delay filing until you pay the bill.)
Second, consider whether you’re going to make additional retirement plan contributions for this year. If so, and if you have the cash on hand, make the contribution now rather than waiting until tax time. Or if you have allocated your 401k contributions equally over the year, switch your next paycheck to deposit the largest lump sum you can afford into your 401k now to further reduce your cash on hand. (If you’re unsure if you are eligible for additional retirement plan contributions, you can make the contribution now to get the cash out of your taxable account and correct it once you find out whether or not you’re able to do so.)
Keep in mind that only 5.64% of your assets above the asset protection allowance count, so every $1,000 you remove from assets only saves you $56 in EFC. Which is to say, if you’re close to the level of reporting assets these adjustments can be helpful, but if you’re way above, it might not be worth your time.