By Debbie Placke, Vice President, Manager, Financial Planning Marketing and ToolsPrint This Post
If you have college aged children, you are probably taking on the task of filing the FAFSA (Free Application for Federal Student Aid) for the 2017-2018 school year. This is the main financial aid document that millions of parents complete every year to be eligible for federal and state aid. If you are one of those parents, or you will be sometime in the future, you may be wondering which assets affect the financial aid decision.
Here is a rundown of which assets need to be reported and which ones are excluded from the FAFSA.
Reportable FAFSA assets include:
- Non-retirement investment assets (checking and savings, certificates of deposit, savings bonds, taxable brokerage account, vested stock options and commodities).
- Equity in property other than personal residence (vacation homes and investment properties).
- College accounts owned by the parents (529 plans and Coverdell Education Savings Accounts – reported as assets of the parents).
The value of these reportable assets should be based on the account balances at the time that the FAFSA is filed (deadline is June 30, 2017 for the 2017-2018 school year). Even if these assets are held as certificates in a safe deposit box, they are still required inclusions.
Non-reportable FAFSA assets* include:
- Qualified retirement assets (IRAs, 401(k)s, 403(b)s, SEP-IRAs, Roth IRAs, Keogh, SIMPLE, and Pension plans)
- Annuities and life insurance
- Equity in family home
- Household possessions
- Family farms/small businesses (If the family resides there and materially participates in the operations, the family farm should be excluded. Small businesses should be excluded if there are less than 100 full-time employees and the family owns more than 50%.)
Recent rule changes have made it easier to start the process early. For the 2017-2018 school year, income is based on your 2015 tax return, so you could have started your application as early as October 1. The FAFSA takes the average student around 25 minutes to fill out according to the U.S. Department of Education’s Federal Student aid website.
Please remember, Benjamin F. Edwards & Co. does not provide legal or tax advice, therefore it is also important to consult with your legal and tax professionals for additional guidance tailored to your specific situation.
*These assets are not included in the determination of financial aid eligibility.