Key Points
Understanding how college savings affect financial aid eligibility helps you choose the right account structure. Parent-owned assets are assessed at a maximum 5.64% rate on the FAFSA, while student-owned assets are assessed at 20%. The account ownership structure matters significantly for families who may qualify for need-based aid.
FAFSA asset types and assessment rates
| Asset Type | Counted on FAFSA | Assessment Rate | Example Impact |
|---|---|---|---|
| Parent-owned 529 | Yes | 5.64% of value | $50K 529 = $2,820 EFC addition |
| Student-owned 529 | Yes (as parent asset) | 5.64% (treated as parent) | Same as parent-owned |
| Student checking/savings | Yes | 20% of value | $5K student savings = $1,000 EFC addition |
| Parent bank/investments | Yes | 5.64% | $100K savings = $5,640 EFC addition |
| Grandparent 529 | No (account not reported) | 0% | No asset impact |
| Retirement accounts | No | 0% | Max retirement first |
If your family may qualify for need-based aid, keep college savings in parent-owned 529s rather than student accounts. Parent asset assessment is 5.64% vs 20% for student assets -- a 3.5x higher impact from student accounts.
What This Means for You
- FAFSA assesses parent financial assets at maximum 5.64% -- 529 is the best parent-asset vehicle
- Student assets are assessed at 20% -- minimize assets in the student’s name
- Retirement accounts are not reported on FAFSA -- maximize retirement savings first
- Primary home equity is not counted on FAFSA (but is counted on CSS Profile at private schools)
- 529s owned by parents combine best tax benefits with lowest financial aid impact
Calculate Your College Savings
Use the college savings calculator to determine exactly how much you need to save monthly based on your child’s age, target school type, and desired coverage percentage.
Calculate Your College Savings Goal
Enter your child’s age and target school to see your personalized monthly savings plan.