How to Represent Your Family's Assets on the FAFSA

It’s no secret that the Free Application for Federal Student Aid—or the FAFSA, as it is familiarly known—is a college admissions hurdle that many dread. According to our College Hopes & Worries survey of 11,900 students and parents, “completing financial aid forms” rates as one of the toughest parts of the college process.

Fortunately for students (and unfortunately for parents), parents have to do most of the heavy lifting. If you’re a parent, read on.

The FAFSA will ask you to provide a number of financial details, including your current assets. Here are three tips on how to best represent yourself when disclosing your assets.

Tip #1: Consider the Money You Have Available—Right Now

Financial aid officers (FAOs) will use your assets to get an idea of what sort of funds you have immediate access to. The main sources here will be funds available in your checking and savings accounts. This is the first step (of many) that will help them determine what aid is needed in order to fund your (or your child’s) college education.

Bear in mind: FAOs recognize that everyone has financial obligations that place limits on whatever assets they may have. The FAFSA aims to represent this broader picture by focusing on net assets rather than gross assets. In other words, the form accounts for your liabilities.

Tip #2: Account for Net Assets

This is one area in which your debts could potentially work in your favor, as they’ll reduce your net assets. Before you start spending up a storm, though, be aware that the FAFSA’s one notable exception is credit card debt. Much as you might want to argue that credit card debt definitely affects the amount of money you have on hand, that argument doesn’t count where the FAFSA is concerned.

What the FAFSA will take into account includes:

•      Mortgages
•      Passbook loans
•      Margin loans
•      Home equity loans

Any debt that you may have outside of these will be viewed by the FAFSA as living outside of the means available to you, and therefore those expenses shouldn’t factor into the amount of money your child receives for college. Unexpected things happen, though, and you might have had to put a high charge on your credit card in the past few months. If that’s the case, there are still ways you can note such debts as part of your child’s financial aid application.

Tip #3: Shift and Minimize Some Assets

Remember that the FAFSA is looking at money you have in the bank and not at your credit card debt. So, if one outweighs the other, it wouldn’t be a bad idea to pay off some, if not all, of that credit card before submitting your FAFSA. Not only does this work to minimize any interest you’d be paying on your card, but it also decreases the amount you’ll claim on the need analysis form—and could yield more financial aid.

The same can be said for any large purchase you’ve been planning to make. If your car is due for repairs, or if you’ve been eyeing a home renovation, large or small, this might be a good time to do it, so long as you pay in full instead of using credit. We certainly don’t recommend going on a shopping spree, but getting the most from these forms can sometimes come down to proper timing, and there’s no one who would blame you for planning your spending strategically.

Trying to account for all the ways in which your assets and your needs may be scrutinized can be stressful. For help finding funding in unlikely places, check out our book 8 Steps to Paying Less for College . And make the most of another of our titles, Paying for College , which has specific information about how to fill out the FAFSA, line by line.