Do 401k accounts count as investment Net Worth on FAFSA parent section?
I'm totally confused about what counts as "Net Worth of investments" on the parent section of the FAFSA. We included our 401k retirement accounts in that number which made it really high (about $187,000). But now I'm second-guessing if retirement accounts are even supposed to be included? If they're not, we'd need to change that value to basically $0 since we don't have other investments. I'm worried we've screwed up our SAI calculation by including retirement funds. Has anyone dealt with this before? Should we submit a correction?
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Mohamed Anderson
No! Don't include 401k accounts in the net worth of investments section. Retirement accounts are SPECIFICALLY excluded from FAFSA reporting. This is directly from the Federal Student Aid website. You definitely need to submit a correction ASAP before your SAI (Student Aid Index) is calculated with incorrect information.
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Selena Bautista
•Oh no! Thank you for confirming. I was afraid we'd messed this up. Do you know how quickly I need to submit the correction? Our original application was submitted last week.
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Ellie Perry
we did the same thing last yr lol. dont worry just fix it asap! the fafsa ppl are used to this mistake
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Landon Morgan
This is a very common mistake! The FAFSA instructions can be confusing. To clarify what should and shouldn't be included in the "Net Worth of Investments" section: DO INCLUDE: - Real estate (other than the home you live in) - Rental properties - Trust funds - Money market funds - Mutual funds - CDs - Stocks, bonds, other securities - 529 college savings plans DO NOT INCLUDE: - The home you live in - 401k accounts - Pension funds - Traditional IRAs - Roth IRAs - Annuities - Keogh plans - Life insurance You should definitely submit a correction. The good news is that your SAI will likely decrease significantly after this change!
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Selena Bautista
•Thank you for the detailed breakdown! This is extremely helpful. You're right that the instructions weren't clear to us at all. I'll make the correction today.
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Teresa Boyd
THEY DO THIS ON PURPOSE I SWEAR!!! The whole system is designed to be confusing so more people make mistakes. My daughter's financial aid got delayed by 2 months because of a similiar mistake. The colleges don't help either - they just tell you to call Federal Student Aid and good luck getting through to anyone there!!!
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Lourdes Fox
•omg so true. took me FOREVER to fix our mistake last year
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Bruno Simmons
You need to submit a correction right away. I had to do this when I made the exact same mistake. Try calling the Federal Student Aid helpline at 1-800-433-3243 to confirm they've received your correction. But warning: I was on hold for almost 2 hours before someone picked up. Some people have had success using Claimyr.com to get through faster - they have a service that holds your place in line and calls you back when an agent is available. There's a demo video of how it works here: https://youtu.be/TbC8dZQWYNQ
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Selena Bautista
•Thank you for the tip! I just submitted the correction online, but I'm going to call to make sure it was received properly. I'll check out that service if I can't get through - the last time I called I gave up after 45 minutes on hold.
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Ellie Perry
just wondering but do yall know if home equity counts? we own our house outright but the fafsa instructions r confusing
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Landon Morgan
•The home you live in (your primary residence) is NOT reported on the FAFSA at all. Home equity in your primary residence is completely excluded from FAFSA calculations. However, if you own additional real estate beyond your primary home, the net value of those properties would need to be reported.
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Aileen Rodriguez
When my son applied last year, we had to go through a whole verification process because we made this exact same mistake. The financial aid officer at his college actually caught it and asked us to correct it. His SAI dropped by like 14000 points after fixing it! Just make sure to fix it before any colleges download your FAFSA data.
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Selena Bautista
•That's a huge difference! I'm definitely going to get this fixed right away. I'm hoping none of the schools have downloaded our data yet.
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Mohamed Anderson
UPDATE: I just checked the 2024-2025 FAFSA guidelines and it specifically states: "Investments do not include the home in which you live; cash, savings, and checking accounts; the value of life insurance and retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)." So you're definitely doing the right thing by correcting this!
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Selena Bautista
•Just wanted to update everyone - I submitted the correction yesterday and called to confirm they received it. The agent said it would take about 3-5 business days to process and that colleges would get the updated information automatically. Our SAI should decrease significantly without the 401k included. Thank you all for your help!
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Yuki Watanabe
•That's great news! I'm so glad it worked out for you. This thread will be really helpful for other parents who make the same mistake. The FAFSA really should make this clearer in their instructions - it seems like so many families include retirement accounts by accident.
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Tate Jensen
As someone who just went through this process with my daughter's FAFSA, I can confirm this is one of the most common mistakes parents make! The terminology is really misleading - when they say "investments" most people naturally think retirement accounts are investments. But the federal government treats them completely differently for financial aid purposes. One tip that helped us: when in doubt, always exclude rather than include. The FAFSA is looking for assets that are easily accessible, not funds that are locked away until retirement with penalties for early withdrawal. Your correction should definitely improve your financial aid eligibility significantly!
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