Low income + stock portfolio - impact on FAFSA and CSS

If I have low income (under $15K), but a sizable stock portfolio, how does that impact financial aid on FAFSA and CSS for my DC who will be applying to college?

If you qualify for the Automatic 0 or Simplified Needs formula, your assets will not be considered. Here is information: https://ifap.ed.gov/sites/default/files/attachments/2020-08/2122EFCFormulaGuide.pdf (you can do a search for automatic 0 and for simplified needs to get the details on qualifying).

It sounds like you will qualify for the simplified needs analysis based on your income which means you can bypass the asset questions and not even answer them.

@TheFAFSAGuru and @kelsmom there is not a simplified needs test for the Profile…at all. All of the assets including the stock portfolio will need to be reported to Profile schools.

For FAFSA purposes, this student could have an auto $0. But that would give them a $6500 or so Pell Grant and a $5500 Direct Loan as the only guaranteed federally funded need based aid. That $12,000 will not fund a years education at a Profile school.

The student will need institutional need based aid, and Profile schools will use the data on the Profile to determine awarding of institutional need based aid.

@sonatarhia when you say “sizable” stock portfolio…what do you mean? $100,000? $1,000,000? Or more? There is a difference.

There was a poster here a number of years ago whose kid applied to and was accepted to NYU with not a dime of need based aid. The parent had managed to get their income down to practically nothing… but had millions of dollars in assets. NYU flagged them for verification…asked how day to day living expenses were being paid with such a low income. Questions about how the assets were so high were posed as well. Apparently NYU didn’t budge on their aid award because of the large assets the family held.

Profile schools will ask for the assets on the Profile…and use them in their need based institutional aid calculations.

@thumper1 almost $500K (due to this great market!), all stock options from my previous employer which I never sold. Was going to hold onto the stock as my retirement, but sounds like I may need to take a BIG chunk out to pay for college???

To clarify some comments from both: if my DC choose to go to a profile school (I assume that means the school uses the CSS?), I should get the $12K each year (Pell + Loan) at a minimum, no matter what, is that correct?

Whether I get anything above that, will depend on school (which will be based on my income + assets, etc), is that right?

You would need to qualify for the simplified needs test for assets to be excluded on the FAFSA. Your income is the main qualifier, but there is a secondary qualifier that had to be met as well

If you qualify for simplified needs on the FAFSA and don’t need to report your assets, you would get whatever entitlement federal aid you are entitled to. That would be Pell Grant (whatever portion you are entitled to) and the federally funded Direct Loan.

Any institutional aid would be at the discretion of the college(s) and their policies on awarding need based aid.

Did you have a plan for funding college costs?

Do you have other funds in an actual retirement account (IRA, 401K, etc.)?

I do have some funds in a 401K account.

Looks like we should focus on in state colleges at this point (unless I want to touch my portfolio). Tough decision…

@sonatarhia

On a $15,000 a year income…what can you pay for college each year?

Does your student have excellent stats…GPA and SAT or ACT if taken? Does your state offer any grant aid to low income students. Some states do.

Is this student a senior now?

Any chance the stock options are under a QRP or Qualified Retirement Plan?

Yes absolutely…I was referring to the FAFSA and should have clarified! Thanks for pointing that out! The CSS Profile is a whole separate supplemental financial aid form that some colleges require but not all of them do and will definitely look at all assets, none are protected.

Ok… it’s a bit more nuanced than that. Profile asks about primary home equity, but different Profile schools use that in different ways. Some Profile schools disregard primary home equity in calculating institutional need-based aid, some consider 100%, and other schools use a percentage between 0 and 100. Also, while Profile does ask for the balances of qualified retirement accounts, it’s highly unlikely that this information affects aid, except in outlying cases.

There is no doubt that the profile will ask for the value of those stocks if they are not in qualified retirement accounts.

It does ask, vis-a-vis a QRP. If they’re held under a QRP, you report the $$, but my understanding is they’re not included in calculations. (Once found a paragraph that explained the info is used to understand your relative financial stability in retirement.)

No, all the shares are now vested in a regular account. Wish it was retirement account though!!!