Income vs Assets and 529 impact on FA

What has more impact on FA, income or assets specifically if they are significantly different? for instance if one has $75k income and $1mil non retirement assets or $250k income but no assets?

Do all assets (stock, bonds, cash, 529, home equality when it is counted) count the same? I know for instance 529 when parents own it count as 5.6%. Does it mean only 5.6% of total 529 assets are included in EFC?

I know that all siblings’ 529 assets must be reported on each child FA. Are assets, specifically 529 “normalized” per child? For instance if there are three children and each has $50k in separate 529 account, is it reported as each child has $150k?

Here is the FAFSA formula. You can print it out and work through the various scenarios on paper: https://ifap.ed.gov/efcformulaguide/attachments/1920EFCFormulaGuide.pdf

You need to make a distinction between 529 accounts that are owned by a parent, and a 529 account that is owned by a reporting student. On FAFSA, a 529 account that is owned by the reporting student is reported as a parent asset. It is not reported on the FAFSA of a sibling. On FAFSA, any 529 account, regardless of who the named account beneficiary is, that is owned by a parent who must report financial information on FAFSA is reported as a parent asset.

Dollar for dollar, income has more impact on the EFC than assets, but if they are so out of whack that the asset value is many multiples of income, at some point assets will make the greatest difference in how the EFC is calculated.

529 accounts are not owned by child, they are owned by parents. Child is a beneficiary. I am still unclear if I have three 529 accounts for my three children do I report on FAFSA or elsewhere for FA purpose combined value of these accounts for each child?

If you own three different 529 accounts, the total value of all the accounts needs to be reported as a parent asset on the FAFSA for any child for whom you are required to provide financial information. For instance, if 529 account #1 that you own names your oldest child Adam as the beneficiary and has a balance of $50,000, 529 account #2 that you own names your youngest child Brittany as the beneficiary and has a balance of $40,000, and 529 account #3 that you own names your nephew Charlie as the beneficiary and has a balance of $30,000, when the FAFSA for Adam is completed you will need to include the total value of all three 529 accounts ($120,000) as part of your parent assets.

Someone with $1 million in non-retirement assets would have $56,000 tapped from that set of assets to pay for college. Then additionally…an amount from the $75,000 income would be added in…at LEAST $15,000. This person would not likely receive need based aid.

$250,000 in income…and not a penny of assets would give a family contribution in the $62,000 to $80,000 range…or so.

In either scenario, need based aid would be unlikely with only one student in college at the same time.

At some very generous colleges, if there were two or three kids in college at the same time, the family might…MIGHT get some need based aid.

If you have either of these situations @Al73 did you expect to get some need based aid at all?

ETA…parent owned 529 accounts belong to the parents…and the total from all of these are listed on each kid’s financial aid forms…just like any other parent owned account.

Thank you for the info but I am still not absolutely clear. Few questions:

Does FA formula that either FAFSA uses or colleges use when calculating FA divide total assets by number of children attending college? If total value of 3 529 plans is $150k and there are three kids attending college does FAFSA assume only $50k is available for the the child the current FAFSA is filed for?

For 5.6% rule, does it apply to 529 only or to any assets parents own? For instance, if parents have $1mil in non retirement assets (say stocks) is it assumed only $56k is available to pay for college? Or different formula is applied to different assets (529 vs non-529)?

When you complete the FAFSA and Profile, you will also put in how many are attending college for the academic year for that FAFSA and Profile form. The calculation of each EFC will not take your assets and divide them up…that’s not how it works.

The FAFSA formula will account for the number in college. If your calculated EFC for one kid is $80,000 then your EFC for EACH of two kids will be in the $40,000 a year range. But that doesn’t mean a thing in terms of need based aid…unless the college guarantees to meet full need for all.

For schools using the Profile…it’s not 50% per student if there are two in college…it’s 60% each. So if your calculated family contribution from a Profile school was $80,000 for one kid…it would be $48,000 for each of two kids…or so.

Assets are assets are assets. For FAFSA purposes they are all assessed at about 5.6% of their value.

For Profile schools…all bets are off.

Remember too, many Profile schools will also consider a portion of your primary home equity in the calculation.

Are you self employed or do you own a business? Do you own real estate other than your primary residence? If no to these…have you run the net price calculators for the colleges your twins are interested in attending?

No, the FAFSA does not divide by number of children. It assumes 5.6% of assets, whether they’re stored in a 529 or stuffed under your mattress, are available to use in the year for which you are applying for aid.

All assets, except home equity and money in qualified retirements accounts, are assessed under the same formula. FAFSA assumes 5.6% is available for college in the year for which you are applying for aid.

The OP also mentioned that one of his twins outdoor be attending an instate public university. Even with two in college…it’s not likely that either of the above scenarios would net a dime of need based aid at an instate public university.

For the other twin, he mentions OOS publics or a private college. Unless these colleges guarantee to meet full need…there is no guarantee that even with twins , there will be any need based aid awards. The only public universities that guarantee to meet need for all accepted OOS students are University of Virginia, and UNC-CH…and both are very competitive for admissions to OOS students. The rest of the OOS publics do not guarantee to meet full need for all.

Private universities also do not all guarantee to meet full need for all.

If you are not self employed. Don’t own a business. Don’t own real estate in addition to your primary residence…run the NET PRICE CALCULATORS.

If you are self employed or own a business, or own additional real estate, you might find that your family contribution at a Profile school is a lot higher than your FAFSA EFC. Also…remember that primary home equity and find out what those private schools are assessing for that.

Any chance your twins have strong enough stats to garner some merit aid? If they are seniors NOW, they may have already missed some of the early application deadlines for merit consideration for 2019-2020 academic year.

University of Alabama deadline is December 1, I think. Would they qualify for merit aid there to help soften your college payment blow?

And what is this special major that requires one twin to go to a much more costly college? What is the career goal. Sometimes folks think they can only major in one thing to get to their end game…when that just isn’t true.

Wait…your twins are just HS juniors. So good news…they won’t be applying until early fall 2019.

Start researching places where they can get some guaranteed merit aid. That will not be income or asset dependent. If your kids can get full tuition scholarships…than your costs would be room, board and spending money…probably under $20,000 each per year.

I would research those possibilities.

Make sure they get great grades, and have them prepare for the SAT and/or ACT.

Is there place in FAFSA that specifies number of children attending college and does FAFSA formula take this number into account when calculating FA if entire assets from all children 529 must be reported for each child?

And if parents have $1mil assets and only 5.6% ($56k) only available to pay for college it does not cover even 1 year of private college for one child, and provided one has relatively modest income in reporting year does it mean one is eligible for need based FA?

It is 5.6% each year so $56,000 the first year, $52,864 the second (assuming remaining assets of $944K), etc.
You might get some modest need based aid to cover the difference between $56K and a $70K COA, but that would only be relevant at private colleges which will need the Profile and may consider home equity etc.

However with twins you may well get more aid, even if the second kid is attending a cheaper in-state public (the actual cost of the second kid’s school is generally not a factor in determining aid from the first kid’s school).

Yes, you indicate the number of kids in college on the fa

Yes, you indicate the number of kids in college on the fafsa and Profile forms.

If you have a million dollars in regular accounts, you will be expected to contribute from that asset.

Each of your children will need to file the FAFSA separately. Your data will be included in each of those filings. Your data will be the same both times, and each kid’s information will be somewhat different because of each one’s individual earnings and assets. Depending on how different each kid’s earnings and assets are, each one’s EFC can be somewhat different from the other’s, Your share of each kid’s FAFSA EFC will be approximately half of what your share would be if you only had one kid in college.