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.
If I missed anything, please submit it in the comments.
There are 17 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.
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!