When you sill out your applications for federal student aid through the FAFSA application, there are many factors that you need to consider and be aware of to ensure you get the most money possible from the federal government. The calculations are detailed but if you know the secrets, you can easily position your assets to allow yourself the greatest chance of receiving the college funding that you deserve. In the following paragraphs I will layout some places to hold assets as well as some places to avoid.
To start out with, let's go through some of the areas where it is wise to keep your assets positioned. These are instruments that the FAFSA board does not include in their assessment. They include things like cash value life insurance policies, annuities, equity value in the primary home residence, the family farm, retirement accounts, personal assets and items such as household furniture and collections. Also, your 401K, IRA, SEP, Keogh, or any other type of retirement savings are safe from being counted as assets.
No let's talk about the accounts that will count as income for the student and the family. These are accounts that you want to avoid having a lot of money in them if you can help it. The FAFSA board will look at these assets as income and lower your eligibility for aid based on the amounts held in these types of accounts. They include accounts like: trusts, stocks, limited partnerships, stocks, money market accounts, all types of bonds, mutual funds, certificates of deposit, custodial accounts, investment properties and vacation homes, farm equipment and business assets and equipment. One way to help offset these accounts is by having a loan or mortgage outstanding on them, such as in the real estate and farm equipment.
Where trust funds and custodial accounts are concerned, the government will not assess the entire amount as income unless the account is the sole possession of either the student or parent. In cases where a trust or custodial account is in place for multiple people, a financial consultant may need to be involved in order to balance the amount of moneys belonging to the student and/or the parents. Once all disposable assets have been calculated by the FAFSA administrator, the next set of rules governing financial aid assessment will come into play. The federal law allows for an asset protection allowance to help ensure the future stability of the family's income.
There are several factors that go into the calculation to protect future stability of the family's income. Not only do they take into account the assessed income of the family, but also the age of the parent(s) both at the time of application and the projected graduation date. The older the parents, the better the allowance calculation. No matter how you structure your assets, be aware that they have to be in those accounts for at least 12 months prior to applying for college funding or filling out the FAFSA application. It is important to get the assets structured and in place with plenty of time prior to completion of the application.
To start out with, let's go through some of the areas where it is wise to keep your assets positioned. These are instruments that the FAFSA board does not include in their assessment. They include things like cash value life insurance policies, annuities, equity value in the primary home residence, the family farm, retirement accounts, personal assets and items such as household furniture and collections. Also, your 401K, IRA, SEP, Keogh, or any other type of retirement savings are safe from being counted as assets.
No let's talk about the accounts that will count as income for the student and the family. These are accounts that you want to avoid having a lot of money in them if you can help it. The FAFSA board will look at these assets as income and lower your eligibility for aid based on the amounts held in these types of accounts. They include accounts like: trusts, stocks, limited partnerships, stocks, money market accounts, all types of bonds, mutual funds, certificates of deposit, custodial accounts, investment properties and vacation homes, farm equipment and business assets and equipment. One way to help offset these accounts is by having a loan or mortgage outstanding on them, such as in the real estate and farm equipment.
Where trust funds and custodial accounts are concerned, the government will not assess the entire amount as income unless the account is the sole possession of either the student or parent. In cases where a trust or custodial account is in place for multiple people, a financial consultant may need to be involved in order to balance the amount of moneys belonging to the student and/or the parents. Once all disposable assets have been calculated by the FAFSA administrator, the next set of rules governing financial aid assessment will come into play. The federal law allows for an asset protection allowance to help ensure the future stability of the family's income.
There are several factors that go into the calculation to protect future stability of the family's income. Not only do they take into account the assessed income of the family, but also the age of the parent(s) both at the time of application and the projected graduation date. The older the parents, the better the allowance calculation. No matter how you structure your assets, be aware that they have to be in those accounts for at least 12 months prior to applying for college funding or filling out the FAFSA application. It is important to get the assets structured and in place with plenty of time prior to completion of the application.
About the Author:
=============================== About the Author: Brandon Hansen is a college funding expert. For more information on what FAFSA thinks about your assets , visit http://www.myschoolplans.com/
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