Which 529 Plan Assets Are Reported on the FAFSA?

To maximize your financial aid package, it’s important to learn which assets and debts are reported on the FAFSA. The higher your total reported assets, the higher your SAI and the lower your financial aid package will be. Luckily, only some assets are reported on the FAFSA. Some assets must be reported, but will only reduce your aid by a percentage of their value. So, if you distribute your money strategically before submitting the form, you may receive more financial aid. 

Here’s our guide about which assets are reported on the FAFSA, and how much each asset affects your aid. We’ll explain how you can move your money around in order to minimize your reportable assets. 

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What has changed for the new 2024-2025 FAFSA? 

The 2024-2025 FAFSA is significantly different from previous FAFSA forms due to a new formula resulting in fewer questions for the user. This includes the elimination of the Simplified Needs Test (SNT) which previously granted qualified families the ability to be exempt from reporting any assets. However, despite the elimination of the SNT, some applicants will still qualify for an automatic Maximum Pell Grant or be exempt from asset reporting based on similar criteria. 

A student may be eligible to have their assets excluded from the SAI calculation if they (or someone in their family) received one (or more) of the following federal benefits during the 2022 or 2023 calendar year

• Earned income credit (EIC)
• Federal housing assistance
• Free or reduced-price school lunch
• Medicaid
• Refundable credit for coverage under a qualified health plan (QHP) 
• Supplemental Nutrition Assistance Program (SNAP)
• Supplemental Security Income (SSI) 
• Temporary Assistance for Needy Families (TANF) 
• Special Supplemental Nutrition Program for Women, Infants and Children (WIC) 

List of reportable assets

On the FAFSA an asset is defined as a property that the family owns and has an exchange value. The FAFSA form collects current data such as cash, savings and checking accounts; investments and real estate and businesses and investments farms.

The FAFSA asks for the net worth of investments, which is their total current market value minus their associated debts. If the net worth is negative, zero should be reported. The following are considered investments by FAFSA standards:  

Investments

• College savings plans 
• Coverdell education savings accounts
• Real estate
• Installment
• Land sale contracts (including mortgages held) 
• Trust funds
• Mutual funds
• Money market funds
• Uniform Gifts and Uniform Transfers to Minors (UGMA and UTMA) accounts
• Certificates of deposits, stocks, stock options, bonds, commodities and precision metals 

Applicants will need to report the net worth of all businesses and farms regardless of the size of the enterprise, location of the family’s residence on the property or the number of employees. However, the value of a family’s primary residence is still excluded, even if the residence is on the farm property or used to run the business. The current net worth (the current market value minus the debt owed on it) should be reported for the following: 

Businesses and Farms

• Land
• Buildings
• Machinery
• Equipment
• Livestock
• Unharvested crops
• Inventories 

For an independent student, the accounts owned by the student (and/or the student’s spouse) are reported as student investments. For a dependent student, an account is reported as a parental investment if the account is designated for the dependent student. 

Qualified education benefits or educations savings accounts

• Coverdell savings accounts
• 529 college savings plans 
• The refund value of 529 prepaid tuition plans 

Also see: What are the 529 Plan rules? 

Rental Properties 

• A unit within a family home that has its own entrance, kitchen and bath (a rented bedroom does not count) and that is rented to someone other than a family member counts as an asset.

Take-back mortgage

• In a take-back mortgage, the seller of a house finances a portion of its cost for the buyer, who repays this additional mortgage to the seller. The value of the take-back mortgage should be reported as an asset on the FAFSA form. 

Virtual currency or cryptocurrency

• Any form of virtual currency such as Bitcoin is considered an asset. The value in U.S. dollars as of the day the FAFSA form is completed must be reported. 

Uniform Gifts and Uniform Transfers to Minors Acts (UGMA and UTMA) 

• A UGMA or UTMA allows the creation of an account for gifts of cash and financial assets for a minor without the expense of creating a trust. The minor is the owner of the account so it counts as the minor’s asset on the FAFSA form, not the asset of the custodian, who is often the parent. 

Trust funds 

• A trust fund is considered an asset of the named beneficiary of the trust, even if the beneficiary’s access to the trust is restricted. However, if a trust has been restricted by court order, the beneficiary should NOT report it. 

List of exempt assets

The following assets do not need to be reported on the FAFSA. But before you omit them, make sure to double-check that you meet the requirements.

Possessions

• Such as a car for personal use, a sound system, clothes, or furniture.

Principal place of residence

• This does not need to be reported even if it is part of business or farm property.

Retirement and life insurance plans and ABLE accounts 

• The value of retirement plans (401(k) pans, pension funds, annuities, non-education IRAS, Keogh plans, etc.) are not counted as an asset, but distributions do count as income. An exception to reporting pension distributions is when they are rolled over into another retirement plan in the same year (rollover). 
• The cash value or equity of a whole life insurance policy is not reported as an asset, but an insurance settlement may count as income if it is included in the student’s AGI.
• An ABLE account is a tax-advantaged savings account for a disabled person and their family which does not count as an asset on the FAFSA. 

Excluded assets for Native American students

• The law excludes reporting any income and asset of $2,000 or less per individual payment (any amount over $2,000 is reported as an asset of the recipient). 
• It also excludes any income received under the Alaska Native Claims Settlement Act or the Maine Indian Claims Settlement Act. 

529 Plan and FAFSA

For the 2024-2025 FAFSA qualified education benefits or education savings accounts including Coverfell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans must be reported. However, the status of the student affects who the asset is reported under. For example, an independent student would log a 529 account as their personal asset while a dependent student would report that account as a parental investment. 

Related: Does a 529 Plan impact financial aid, including FAFSA?

How does debt affect the FAFSA?

You may be wondering if your debt could have a positive impact on your or your child’s financial aid. This could include consumer debt, educational debt, or business debt. Unfortunately, the FAFSA does not take your debt into account. You won’t receive a more favorable financial aid package due to your level of debt.

The FAFSA asks for the net worth of investments, which is their total current market value minus their associated debts. So, you can use debt to your advantage. Parents or students can put savings money towards their debt to reduce reportable assets. Using this strategy will reduce the amount you owe overall, and reduce the amount you report on your FAFSA.

Protecting your assets

Paying down debts

One of the best ways to reduce your reportable assets is to pay down debts. It’s important to keep some savings for a rainy day, so don’t empty your savings account. But let’s imagine you have substantial savings and owe money on your car, home, or education loans. It could be a good idea to pay down your loans in order to maximize your financial aid. This reduces your reportable assets while paying down future debts.

Read more: Paying off student debts early

Moving money around

There are many ways to move your money around in order to convert it from reportable to non-reportable assets. You can increase contributions to your retirement account, which is non-reportable. You can also purchase items that your student will need for school. If they will need a car or a computer for college, consider buying it before you submit your FAFSA. By doing this, you’ll reduce your reportable assets.

But in many situations, reporting your assets on the FAFSA is unavoidable. However, you do have control over what type of account these assets are in. Shifting the money between different accounts can improve your financial aid package drastically. Shifting money from a savings account into a 529 Plan can reduce your reported assets significantly.

Furthermore, ownership of your assets can determine what percentage is reportable. Students’ assets are reported at a higher percentage than their parents’. You can consider shifting any of the students’ assets, such as college funds from grandparents, into their parents’ names. Even though you’ll report the same amount of assets, you won’t be penalized as harshly for them.

Also see: How much can I contribute to a 529 Plan?

Don’t forget the CSS Profile

Remember that this guide only applies to the FAFSA. The FAFSA determines federal and state aid, as well as institutional aid at many schools. But some schools utilize the CSS Profile to determine institutional aid. The CSS Profile takes into account a broader array of family assets. If you are seeking institutional aid at a CSS Profile school, you may need to utilize alternate strategies.

Good luck in your FAFSA application process! With these tips in mind, you’ll be able to maintain your assets while maximizing your financial aid package.

Read more: How to complete this year’s FAFSA

Frequently asked questions about which 529 plan assets are reported on the FAFSA