I was completing my fafsa form today and i transferred my parents’ 2015 tax forms. There was a new question asking for their assets. Do I HAVE TO put them? Is there any way they can find out what their true assets are? for example bank accounts there is no way they would know how much they have in their bank accounts. But what about real estate and stuff like that? Also how much would these assets affect my efc?
They could ask to see documentation and records. This is not something you want to lie about. It would be fraud.
In answer to your question, the FAFSA will not look at the value of your primary residence, but it will look at second homes and investment properties.
I believe that after the exclusion – which, depending on age usually is not more than 50,000 – assets are assessed at 5.64% percent. In other words, if you have assets totaling 1 million dollars, 56,400 of it (in the eyes of the government/schools) will go towards your EFC for tuition. (Income, in contrast, is assessed at 20%).
Please clarify - your parents don’t know their own balances or a school verifying your FAFSA wouldn’t know?
It probably asked a question like "are parent assets higher than $2x,xxx ? (which is the parent asset protection amount based on older parent’s age). If your parents have assets (savings, checking account, investments) higher than that, they will have to report them.
Qualified retirement account balances don’t count.
If your parents earned under $50,000 and satisfy other conditions, then they might qualify for simplified needs test, then assets would be disregarded.
I don’t think the simplified needs test will apply here, as OP said that the parent asset question appeared after parent income information was entered.
Uh, yes, you do, unless you want to commit financial aid fraud and risk criminal prosecution.
Yes, it doesn’t sound like income is low enough for simplified needs, I just thought maybe he didn’t see the other questions or didn’t know how to answer them.
If the fafsa is asking for your assets, you need to put down your assets. Period.
And yes, there are plenty of ways for a college to find out what your actual assets are. Colleges frown on dishonesty. Getting financial aid by knowingly providing inaccurate information is fraud. Fraud is a crime.
Are you really asking us to tell you it’s ok to complete a financial aid form with fraudulent information? If so…that’s not going to happen.
ETA…re:bank accounts. Your parents should be able to access their accounts online to get their exact balances.
Schools can ask for any sort of verification they want. We were asked to,send bank statements to one school as part of their verification process. And we complied.
For some states, the FAFSA skip logic does ask for some asset information even if you qualify for simplified assets. It’s not the entire list of questions, but bank account balances was one of them (for both parent and student).
However, there is something to be said about timing. For example, on the first of the month, our checking account is flush, as both of us get paid on the 1st (prior month’s salary), but by the 3rd or 4th 90% of that gone to pay mortgage & car payments & health insurance. I see nothing wrong with waiting until the lowest balance date cycle rather than the highest… BUT DON"T LIE or hide assets!
Sorry if it seems as though i wanted to lie. I just didn’t remember them asking me these questions on previous fafsa forms and also for example for real estate. how are we supposed to evaluate investment properties to calculate net worth. My parents can tell me how much they think they can sell it for but the actual price can be more or less. Thank you guys for your input. You helped a lot.
The only way you can know for sure what a piece of property is worth is to put it on the market and solicit offers. So, for investment reals estate, FAFSA requires that you contact a real estate broker who will list the property.
Just kidding. (Well, the first part is true.) You have to make your best guess about the current market value of the property. Then subtract any indebtedness on the property, and you have your equity that gets included in net worth.
Your parents have investment real estate? Are these rental properties?
Are you saying that in the past, the fafsa asset questions have NOT appeared on your form?
@thumper1 no the asset question has never appeared on my form before. And the investment property they have a mortgage that they are still paying off.
What’s their AGI?
It’s very possible,that their assets were below a certain amount prior to this year. There is a question asked…are your assets more than $____." If the answer is no, the asset question does not get asked.
When did they purchase the investment property?
I could be wrong here, but it seems to me that the very existence of investment property answers the question. How accurate the value of the property is isn’t going to be material in the big picture…i.e. is my beach cottage worth the $750K I paid for it, or has it appreciated to $1M yet? Either clearly knocks you out of the running for financial aide, as it should.
If timing your response to the checking account question changes your answers enough to matter, then you probably won’t have enough $$ at any time to move the needle significantly.
The key is the equity in the investment property…and also how the school views secondary real estate. This varies by school. A lot.
I don’t agree with this. I don’t think that it would be unusual to time certain financial transactions, within reason, to make an impact on the financial aid award that is more than chump change.