There are many factors that go into the calculations that the government uses to determine your eligibility to receive financial aid. It can be very complex to try and figure out where to keep your assets and make the best plan for applying for the FAFSA. There are some places that you should keep extra money and some places to avoid in positioning yourself to receive the most money possible. Below, you will find a generalized explanation of the basic guidelines that you should try to follow in order to keep your assets FAFSA friendly while you are applying for government money.
It may be easier to begin by listing the assets and savings that the FAFSA board will not consider as assessable income for the family or the student. These include annuities, cash value life insurance policies, equity value in the primary home residence, the family farm, personal assets and items such as household furniture, collections, clothing and the like, and retirement accounts. Your 401K, IRA, SEP, Keogh, or any other type of retirement savings are safe from being counted as assets.
The savings and assets which are considered as income of both the family and the student are as follows: trusts, limited partnerships, stocks, bonds, tax-exempt bonds, money market accounts, mutual funds, US savings bonds, custodial accounts, certificates of deposit, checking and savings accounts, investment properties, vacation homes, farm equipment and assets, and business assets and equipment. There are ways that you can offset the assessed value of real property assets, such as owing mortgage amounts on vacation homes or having a margin account loan through your broker.
On custodial accounts and trust funds, the government does not asses the entire amount unless it is in the sole possession of either the student or parent. When the situation arises that the trust or custodial account is in place for multiple people, the advice of a financial consultant may be needed to balance the amount of money belonging to the student and/or parents. After all these calculations have been taken into account, the federal law allows for an asset protection allowance to help ensure the future stability of the family's income.
As for the financial protection, it is calculated to protect the family's future earning's. The FAFSA board will take into account the assessed income of the family and also the age of the parent(s) both at the time of application and the projected graduation date. The older the parents, the more the allowance. Also, there is a window or 12 months prior to applying for college funding or filling out the FAFSA application that the assets have to be held in the accounts. It is important to get the assets structured and in place with plenty of time prior to completion of the application.
It may be easier to begin by listing the assets and savings that the FAFSA board will not consider as assessable income for the family or the student. These include annuities, cash value life insurance policies, equity value in the primary home residence, the family farm, personal assets and items such as household furniture, collections, clothing and the like, and retirement accounts. Your 401K, IRA, SEP, Keogh, or any other type of retirement savings are safe from being counted as assets.
The savings and assets which are considered as income of both the family and the student are as follows: trusts, limited partnerships, stocks, bonds, tax-exempt bonds, money market accounts, mutual funds, US savings bonds, custodial accounts, certificates of deposit, checking and savings accounts, investment properties, vacation homes, farm equipment and assets, and business assets and equipment. There are ways that you can offset the assessed value of real property assets, such as owing mortgage amounts on vacation homes or having a margin account loan through your broker.
On custodial accounts and trust funds, the government does not asses the entire amount unless it is in the sole possession of either the student or parent. When the situation arises that the trust or custodial account is in place for multiple people, the advice of a financial consultant may be needed to balance the amount of money belonging to the student and/or parents. After all these calculations have been taken into account, the federal law allows for an asset protection allowance to help ensure the future stability of the family's income.
As for the financial protection, it is calculated to protect the family's future earning's. The FAFSA board will take into account the assessed income of the family and also the age of the parent(s) both at the time of application and the projected graduation date. The older the parents, the more the allowance. Also, there is a window or 12 months prior to applying for college funding or filling out the FAFSA application that the assets have to be held in the accounts. 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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