What assets do you include on the FAFSA®?

When it comes to preparing for college, filling out the Free Application for Federal Student Aid (FAFSA) can be daunting because it requires a lot of personal and financial information from both parents and students. Some of the questions on the application may leave you confused, especially those about assets.

In plain English, an asset is something that holds value. This includes cash, stocks, and real estate. You and your parents will report certain assets on the FAFSA, backing up any claims with paperwork. These asset records are then used to calculate your Expected Family Contribution (EFC), which is a measure of your family’s financial strength.

What assets are reported on the FAFSA?

Some assets are reportable while others are not. Assets considered for the FAFSA include:

• Money, which includes current balances of any cash, savings, and checking accounts
• Non-retirement investments, like brokerage accounts, real estate (beyond your primary residence), CDs, and/or stock options
• Trust funds
• Businesses you own
• College savings accounts, which include 529 plans and other college savings plans, such as Coverdell savings accounts (Note: Savings plans are reported as an asset of the account owner, not the beneficiary.)

But it’s not as straightforward as just listing the value of assets. On the FAFSA, you’ll be filling out the net worth of your assets, with bank information provided as backup. The net worth of assets is calculated by subtracting any debt owed on the asset from the asset itself. For example, let’s say your parents have a rental property that is valued at $400,000. But they owe $300,000 on the property. The net worth of the property would be $100,000. On the FAFSA, net worth cannot be negative; it can only be recorded as 0, even if the asset has negative worth.

If your or your parents’ net worth is significant, consider consulting a financial professional to assess the most strategic way to handle your assets. There can be tax implications when money is being transferred between accounts and individuals, so it can be a good idea to talk through options with a financial professional first.

What is not considered an asset on the FAFSA application?

Not everything is counted as an asset on the FAFSA. Things that are not assets for FAFSA consideration include:

• Equity you own in your primary residence
• Life insurance policies
• Personal possessions
• Retirement plans, like a 401(k), non-education IRAs, annuities, and others
• UGMA and UTMA accounts that are not owned by you
• ABLE accounts

How are assets used in determining financial aid?

Listed assets are used to calculate your family’s EFC. EFC is determined by a formula, where current income and contributions from assets are calculated to determine how much your family can contribute toward tuition. Worksheets can help you figure out how much your EFC will be prior to completing the FAFSA.

Do I need to answer all asset related questions on the FAFSA?

As you fill out the FAFSA, you may find certain questions don’t apply to you. Depending on your financial situation, you may be given the option to skip certain questions regarding income and assets. Skipping questions won’t impact your eligibility for federal student aid, but it might affect eligibility for certain institution-specific aid.

What if I choose not to list all my assets on the FAFSA?

It is important to be accurate and honest with your financial information on the FAFSA application because it can be audited by the US Education Department through a process known as verification. Verification requires students to further attest to—and in some cases prove—that the information reported on their FAFSA is accurate.

Verification can take many forms. From relatively quick tasks, such as verifying family size, to more time-consuming actions, such as proving a parent’s unemployment status with a notarized letter. If students fail to complete verification, they may be ineligible to receive federal, institutional, or state aid. And if you submit false information and receive aid, you could be responsible for repaying the money and subject to fines.

While it’s important to be as accurate as possible, mistakes happen. If you do make a mistake, you can update your FAFSA after it’s been submitted.

Can I gather my financial materials ahead of time?

You can prepare your financial information before the FAFSA application is available, which is on October 1. Gathering as much information as possible before you start the process can help you fill the application out as seamlessly and quickly as possible. Since you’ll need to include documentation with the FAFSA application, downloading and printing any statements now can pay off in terms of less paperwork later.

^{FAFSA® is a registered service mark of the U.S. Department of Education and is not affiliated with Discover® Student Loans.}