I mentioned in my previous post that asset information should be reported on the FAFSA. However, there are two cases where asset information is not required:
- Simplified Needs Test: Combined family income is less than $50,000.
- Automatic Zero Expected Family Contribution (EFC): Combined family income is less than $30,000.
In either case, asset information is not used. If you're not sure if you qualify for either of these, I encourage you to go ahead and complete asset information. If you qualify for either, the asset information will not be used even if it is reported on the FAFSA.
So, you have to report assets. What assets must be reported? Most common examples are:
- Money markets
- CDs
- Stocks and bonds
- Commodities
- Trust funds
- Real Estate
- Sale of land of contract (asset of land)
- Investment farm land
- Business employing more than 100 employees
What's not to be reported?
- Family home
- Pensions and whole life insurance
- Assets for Native Americans
- Family-owned or small business that employs 100 or less employees
- Farm on which the family lives
Every year we get questions about assets. There are some gray areas:
- Trust funds. If the student (or parent, if dependent) is named in a trust fund, that asset must be reported even if you don't have access to the cash. The reasoning is that you can borrow against the trust fund. There is one caveat: if the trust fund is restricted by court order, the asset should not be reported.
- Jointly shared CDs, money markets, stocks, and any other assets. It's common for a student's name to be on an asset with a parent or sibling. If this is the case, you need to calculate the percentage of the asset you own, and report only the percentage of the actual asset you own.
- Contested ownership. If an asset is being contested (say, divorcing parents), the asset should not be listed. However, any part of an asset not being contested must be reported.
Remember, the FAFSA asks for net worth of invesments, business, and investment farms, which means the value of each after any debt is subtracted against the value. If there is a lien against any asset, you'll need to subtract the lien amount as well as the debt owed to get the net worth.
Hopefully this information will help you in completing the asset information section of the FAFSA.