Expected Family Contribution - Retirement Accts.

[CamperMom]

Hello All,

Can you tell me if retirement accounts are supposed to be included when calculating the expected family contribution for college?

Thank you for your help.

 

 

Edited September 7, 2020 by CamperMom

[8filltheheart]

If they are in a qualified retirement account, they do not need to be included. (If they are in   However, you should be aware that if you are looking at schools that offer institutional grants (as opposed to just qualifying for Pell grants or student loans), that annual contributions will be added back into your income.  Colleges expect you to use your retirement contributions to fund paying for college.

[MerryAtHope]

19 hours ago, 8FillTheHeart said:

If they are in a qualified retirement account, they do not need to be included. (If they are in   However, you should be aware that if you are looking at schools that offer institutional grants (as opposed to just qualifying for Pell grants or student loans), that annual contributions will be added back into your income.  Colleges expect you to use your retirement contributions to fund paying for college.

FAFSA counts annual contributions too, just not the lump sum saved. 

[Lori D.]

This short Cappex article -- "How to Shelter Assets on the FAFSA" -- has a very helpful chart about what are reportable assets, and non-reportable assets for filling out FAFSA.

 

Side note: just a little quibble on my part --I think entitling the article "sheltering assets" is misleading.  While the article's "tip" of using cash assets to pay down debt is very valid for reducing assets that must be reported to FAFSA, -- you just SPENT the asset of cash, and no longer have it to use as cash, so you didn't exactly "shelter" your asset of cash... you reduced debt by using up your asset of cash... 😉

[8filltheheart]

1 hour ago, MerryAtHope said:

FAFSA counts annual contributions too, just not the lump sum saved. 

Thanks for clarifying!! My post is very unclear. It looks like part of it was deleted when I was posting, too. )  In my head I was attempting to clarify that FAFSA does not lead to institutional grants at the vast majority of schools, but usually only Pell grant eligibility and required for federal loans (though all students can take out loans).

[JanetC]

The FAFSA does not ask about IRS-designated retirement accounts. (So, an IRA or 401(k), not a general investment account that you consider to be "for retirement")

The CSS/PROFILE may ask about them, depending on the college.

[Lanny]

20 hours ago, 8FillTheHeart said:

Thanks for clarifying!! My post is very unclear. It looks like part of it was deleted when I was posting, too. )  In my head I was attempting to clarify that FAFSA does not lead to institutional grants at the vast majority of schools, but usually only Pell grant eligibility and required for federal loans (though all students can take out loans).

 

RE: Institutional grants:  I think the CSS Profile gets in-depth information about the finances of a family and is what the schools consider when looking at Institutional Grants.   https://cssprofile.collegeboard.org/

A number of the schools my DD applied to, including UNC, required the CSS Profile, in addition to the FAFSA.

[CamperMom]

Thank you all for the information!  Very helpful!