What is and isn’t an asset on the FAFSA? Here’s a quick “is it or isn’t it?” for you:
- The balance in your checking and savings account: YES it’s an asset!
- The balance in your taxable investment account: YES it’s an asset! You can subtract any debt for which this is collateral, such as a pledged asset line or margin loan.
- Your student’s 529 account that you own: YES it’s an asset!
- 529s that you own for your other children: YES they’re an asset!
- Retirement accounts such as 401(k)s, 403(b)s, traditional or Roth IRAs: NO they’re not an asset!
- HSA accounts: NO they’re not an asset!
- Term life insurance: NO it’s not an asset!
- Cash value life insurance such as whole life, VUL, etc: NO it’s not an asset on the FAFSA but it is on the Profile!
- Annuities: NO it’s not an asset on the FAFSA but it is on the Profile if it’s not in an IRA!
- Primary residence home equity: No it’s not an asset on the FAFSA but it is on the Profile!
- Vacation home: YES it’s an asset! Make sure to subtract the mortgage from its value.
- Rental/investment property: YES it’s an asset, unless it’s part of your home that’s rented to a family member. Make sure to subtract the mortgage from its value.
- 529s owned by grandparents: NO it’s not an asset on the FAFSA but it is on the Profile! And distributions from it are student income in the year they’re received.
- 529s owned by your ex-spouse: NO it’s not an asset on the FAFSA but it is on the Profile! And distributions from it are student income in the year they’re received.
- Vested stock options: YES they’re an asset!
- UTMA or UGMA accounts: YES they’re an asset, specifically the student’s asset!
- Trusts for which you or the student are a beneficiary: YES they’re an asset of the beneficiary!
- Your elderly relative’s bank account for which you’ve been made a joint owner because they thought that was easier than a POA: YES it’s an asset!
- Small businesses you own: NO it’s not an asset on the FAFSA as long as you or your directly-related family owns more than 50% and the business employs less than 100 people! The Profile will ask for more details including the business tax return.
- Family farm that you live on and operate: NO it’s not an asset on the FAFSA!
- Balance on your credit card: NO it’s not an asset! You can’t subtract a credit card balance; you should instead pay the bill before filing.
- Bitcoin or other cryptocurrency: YES it’s an asset! Crypto is now considered a commodity by the SEC and commodities are reportable assets on the FAFSA.
If I missed anything, please submit it in the comments.
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There are 46 comments
What if I’m on middle of messy divorce?? How do I tell what is my asset and what is his? Girls have not seen their Dad in over a year, but he their 529 is in his name.
You’re going to end up going through a financial aid appeal anyway because your tax return will be from 2019 and clearly your situation has changed quite a bit. I’d suggest that you list assets as though you’re already divorced. So for example the 529 in his name doesn’t get included. Joint accounts you could include half. Individual accounts only get reported by that account’s owner. Note that the Profile will ask for both parents’ info.
I have run several NPCs. They don’t seem to ask about 529s held by a non-parent for the benefit of the student. Did I miss this or does the NPC differ in this regard from school to school? If a nonparent-owned 529 is a parent asset on the profile, is it assessed at 5% now as are other parent assets? Or only upon distribution as income to the student? I was thinking it was the latter. Many thanks!
Non-parent 529s are not reported on the FAFSA until funds are withdrawn. At that point, the withdrawal is reported as income to the student. So best practice for a student receiving need-based aid is not to draw from those accounts in excess of the student income protection allowance (~$6900) until January of sophomore year. I am not entirely certain how the Profile assesses these since they are called out as a separate question– in practice schools can do whatever they want with that info. I’d suggest that you simply run the NPC twice, once without the non-parent-owned and then once with (just adding to your total assets). It’s not a perfect solution but it’s a reasonable workaround. At least you’ll see one version of their potential impact.
How about HSA’s? My husband and I run a 501c3 that pays us as employees. Two of the benefits we take advantage of is that the business pays into our 401k’s and an HSA.
HSA is not an asset. Sorry I missed that one!
My mother in law owns a rental home and we include in our tax returns (even though is a loss) – since we take care of maintenance etc.; Is this considered an asset even though it’s not in our name?
If you’re not on the title, it’s not your asset so you don’t need to include it.
Hello I have some money invested in CryptoCurrency does this count as an asset, as it is not a share of a companies stock?
Bitcoin and most cryptocurrencies are classified as commodities. The FAFSA instructions say: “Investments include real estate (do not include the home in which you live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.” So yes, you do report it.
Sorry for another question….. my soon to be ex husband bought into the Texas Tomorrow Fund (Tx Guaranteed Tuition Plan)…. our daughters are listed beneficiaries and I’m co purchaser. Where does this go on the FAFSA? I’ve called FAFSA helpline and they don’t know…..
If you’re listing assets as though you’re already divorced, then it depends who the account owner on the statement is. Typically 529s (and this is a 529) have one owner and one beneficiary. If you are the owner, you list it as your asset. If he’s the owner, you don’t list it at all. However, if he’s the owner then when you take a withdrawal, the withdrawal is included in student income. Which means that if you get an aid package including need-based aid, you’ll want to ideally wait until Jan of your daughter’s sophomore year in college to start withdrawing from it.
So we have been saving money for Spring semester (30k) and now it is sitting in our saving account. We will pay it all to the school in Jan so seems wrong to have to include it in my FAFSA submission, I am planning to submit in Nov.
I am not looking to break any rules, but are there are good suggestions how to handle this money each year so it does not reduce our aid?
If your student is already in college, check with the school about when you need to file. Typically the renewal FAFSA (years after you’ve enrolled) is not due until much later. Both of my kids’ renewals are due in March, after all tuition for the year has been paid. If you have one in high school and another in college such that you don’t want the college student’s tuition $$ affecting the high school student’s FAFSA, check with the college whether you can prepay spring, and check with the schools you’re applying to about FAFSA deadlines. Many– but not all– schools allow you to submit later without affecting aid.
Makes sense – I will ask the school when the real returnee timelines are.
Hi! Does Cryptocurrency count as an asset?
That’s a great question. The FAFSA specifically asks for total balance of “cash, savings and checking accounts” and “net worth of investments.” Here’s what the FAFSA says about “Investments include real estate (do not include the home in which you live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages
held), commodities, etc.”
One might assume that cryptocurrency would fall under the “other securities” category. However, the SEC has stated that cryptocurrencies are specifically NOT securities: “Cryptocurrencies are replacements for sovereign currencies… [they] replace the yen, the dollar, the euro with Bitcoin. That type of currency is not a security.”
I would say that the “spirit” of the FAFSA is that cryptocurrency would be a security even if the “letter” of the FAFSA says it’s not. Mostly because I don’t think the FAFSA wants to indirectly encourage cryptocurrency investments. But that’s just me; it’s not what the FAFSA says.
I’m assuming US Savings Bonds both in parent’s names and children’s names are assets? All children whether student on FAFSA or not?
Correct!
If I own rental properties but they are under a series LLC in Texas, do those get counted as assets?
Yes, rental properties are an asset regardless of being held in an LLC.
My husband passed away earlier this year and both my children (freshman in college and freshman in HS) received Social Security survivor benefits and disability benefits under his record. I deposited the money in savings accounts in their names and SSNs but I am on as joint owner. How should I report these assets broken down by the college student and the younger sibling?
If you are the joint owner, then it’s reported as 50% yours and 50% the student’s. If it’s a minor account where you’re not the joint owner but simply on there as the “adult” then it’s 100% the student’s. If the latter is the case, then you would benefit from transferring any money in the college freshman’s account that is to be used for college into a 529 account so that it’s a parent asset (assessed at 5.64%) and not a student asset (20%). But don’t do that with the HS freshman’s account because then it becomes a parent asset and does get reported on the older one’s FAFSA.
I understand that a family-owned, small business is not considered a parent asset, with some stipulations. How do we go about determining the value of a small business owned by my son (the student)? He is part owner in a multi-member LLC with two other business partners. The business’ only asset is the balance in the business checking account. He’s already reported his 2019 income using the IRS Data Retrieval Tool. We now need to report the value of the business. Would it simply be his share (1/3) of the balance in the business’ bank account?
Good question. There isn’t a lot of guidance on this topic so I think you can apply the same sort of logic– it’s primarily his income. Therefore 1/3 of his share of the business’ bank account would be perfectly reasonable assuming there isn’t some other sizeable asset.
Do I need to report any bitcoin investments on the FAFSA?
That’s a good question. Here’s my response to someone else who was asking about this: The FAFSA specifically asks for total balance of “cash, savings and checking accounts” and “net worth of investments.” Here’s what the FAFSA says about “Investments include real estate (do not include the home in which you live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.”
One might assume that cryptocurrency would fall under the “other securities” category. However, the SEC has stated that cryptocurrencies are specifically NOT securities: “Cryptocurrencies are replacements for sovereign currencies… [they] replace the yen, the dollar, the euro with Bitcoin. That type of currency is not a security.”
I would say that the “spirit” of the FAFSA is that cryptocurrency would be a security even if the “letter” of the FAFSA says it’s not. Mostly because I don’t think the FAFSA wants to indirectly encourage cryptocurrency investments. But that’s just me; it’s not what the FAFSA says.
Our rental property is rented to my parents. Should that be included as an asset?
The FAFSA specifically excludes from assets a rental property that’s rented to a family member. Note that it doesn’t specify that that family member is a dependent. So it seems that you can exclude it.
Thanks for the helpful information! Long story, but I will have a large stimulus check that I will not be able to cash before my son needs to file his FAFSA due to the fact that I am overseas while he is in the US. Should I report this uncashed check (several thousand dollars) on the Fafsa? Thanks!
The question specifically asks for cash and account balances. So technically you don’t have to. However, each person’s $1,600 stimulus payment only adds $90 to your EFC so if you were being scrupulous about reporting this it would not have a drastic impact.
What number would you use to calculate the value of stocks you exercised from options as an employee in a private company? Fair market value or the tax one?
That type of valuation is pretty ambiguous, especially since if it’s a private company you probably can’t sell the shares for market value and might not even be able to disclose the FMV. Using the tax value would be fine.
Does cryptocurrency count as an asset? My son wants to put maybe 400 into it. I am also in the lowest tax bracket if that helps.
Here’s my response to someone else who was asking about this: The FAFSA specifically asks for total balance of “cash, savings and checking accounts” and “net worth of investments.” Here’s what the FAFSA says about “Investments include real estate (do not include the home in which you live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.”
One might assume that cryptocurrency would fall under the “other securities” category. However, the SEC has stated that cryptocurrencies are specifically NOT securities: “Cryptocurrencies are replacements for sovereign currencies… [they] replace the yen, the dollar, the euro with Bitcoin. That type of currency is not a security.”
I would say that the “spirit” of the FAFSA is that cryptocurrency would be a security even if the “letter” of the FAFSA says it’s not. Mostly because I don’t think the FAFSA wants to indirectly encourage cryptocurrency investments. But that’s just me; it’s not what the FAFSA says.
Regarding “Annuities: NO it’s not an asset on the FAFSA but it is on the Profile if it’s not in an IRA!”, so Non qualified Annuity (funded by checking/savings account, not in IRA) is not counted as asset in FAFSA just like cash value life insurance? When you say not an asset on the FAFSA but it is on the profile, how does “on the profile” determine/affect the need based financial aid?
The FAFSA does not count insurance among assets, so annuities (which are insurance products) are not assets on the FAFSA. However, the CSS Profile does count insurance products including annuities among assets. So if you are applying to schools that require the Profile, any nonqualified annuities that you own are reported as assets and will have the same impact on your financial aid as would having those dollars in a 529 or a taxable investment account. So if some annuity salesperson is telling you that you should buy a big annuity in order to get more financial aid, they are not being entirely truthful. Not to mention that annuities have an embedded cost structure (6-10% commission + M&E fees around 3% annually) that will cost you at least as much as, and often far more than, having your money assessed as an asset on the FAFSA.
What about Donor Advised Funds? Are they considered an asset?
Great question! No, a DAF is not an asset since it’s an irrevocable gift.
For the past 10+ years my wife and I have owned real estate as a family business (some rental, some land) inside an LLC, with income/loss reported on Schedule E, but qualify for “real estate professional” treatment. The deeds/mortgages/bank account are all in the name of the LLC. Is the real estate considered an asset under these circumstances? Is our business bank account considered an asset? Obviously the LLC is a pass-through entity so all income is reported on our 1040 and collected via the IRS data retrieval tool. And here’s a new wrinkle: As of 2021 (this year), we will no longer qualify for “real estate professional” treatment due to new employment in another company where I am not at least a 5% owner. The remaining real estate assets in our LLC as of this year are primarily rental and passive in nature but still owned by the LLC. What do you think? Thanks!
The FAFSA is actually pretty specific on this. Unless you are actively engaged in providing services, i.e., a hotel where you’re checking in guests, doing laundry, providing other services, then your real estate is an asset. Qualifying for real estate professional treatment is more of a tax issue than a FAFSA one. The mortgages are subtracted from the property(ie)’s value as are any current liabilities. The bank account can be excluded.
Thanks for your response! To clarify, we would not include the business bank account balance for the question asking about our current account balances (No. 88)? Also, where would we include the real estate value – for the question asking about net worth of parents’ “investments” (No. 89) or the question asking about net worth of parents’ “businesses” (No. 90)? Thanks again – such great resources on your site!
Net worth of investments. Assuming you don’t employ >100 people you don’t report business value.
And correct, you don’t need to report the bank account. Some things are really clear and others are gray.
I too have an LLC with rental properties and everything deeded into the LLC. If reporting the value of the properties minus mortgages I assume that is reported as assets.
How does one value each property? seems subjective if we don’t get official appraisal.
Thanks
It is subjective; you do not need to get an appraisal. You don’t even need to identify the properties or differentiate them from the money in your 529s. I recommend that you document somewhere in your own files how you determined the value, e.g. “Zillow says $x market value, less cost of sale at Y%, less mortgage balance of $Z and current liabilities of $ZZ” so that if you get pulled for verification or asked to provide additional documentation, you can show how you did it.