College Student Loan News and Info

Student Assets and FAFSA

If you are saving for your child’s college education, you might be surprised that it would be best to save in your own name instead of in your child’s name. When a student fills out the Free Application for Federal Student Aid, he or she will be filling out financial information for himself or herself as well as for the parents. If the student has a lot of assets, it may mean he or she will get less federal aid.

Student assets include mutual funds, savings, cash, as well as any other assets that might be viewed as liquid assets. When the FAFSA is reviewed, assets that are in the student’s name are appraised at 20% while the assets and contributions available from the parents are evaluated at 6%. What this basically means is that if the student has a lot in assets, that student will receive less in the way of federal grants and loans than the student who has very few assets. The parent’s contribution will be evaluated, as well, but at a much lower percentage rate than the student’s. It might be better to save in the parent’s name and invest in several different funds, stocks, bonds, etc., as a way of saving for your child’s education.

Another factor that students need to be aware of is their personal income. Students who are considered dependent upon their parents will get an exemption for their first $2,440.00 in earnings. After that, their income is assessed at 50% for FAFSA purposes. Most students need or want a job for extra spending money. However, the student simply needs to be aware that those responsible for giving out federal aid do not see that income as spending money but as potential for the student to pay some of his or her own tuition. If you are really going to hit the books hard and concentrate on your studies, it may mean that you work less and study more thereby receiving more in federal aid and more in the way of concentrated study.

Student assets figure large in the FAFSA arena. You might want to check with the financial aid office where you will be attending school and see if they have any advice for incoming students about the FAFSA and other types of student aid.