FAFSA asset reporting confusion: Custodial accounts vs 529s vs UTMA for dependent students

Great question! Here's how assets are reported for dependent students on the FAFSA: 1. Custodial bank accounts - If it's a true custodial account (like UTMA/UGMA) it's the student's asset, even if your name is on it. But if it's just a joint account with both names where you have full access/control, it's typically reported as a parent asset. 2. 529 plans - These are ALWAYS reported as parent assets when the student is dependent, regardless of who owns the account. This is actually beneficial since parent assets are assessed at a much lower rate (up to 5.64%) than student assets (20%). 3. UTMA/UGMA accounts - These are legally the student's property and must be reported as student assets, which impacts the SAI calculation more significantly. Hope this helps clarify things!

when i did fafsa last yr they told me ALL bank acounts in students name = student assets doesnt matter who else name is on it. but 529 plans r parent assets which is better cuz they count less in the formula thing. this stuff is SO CONFUSING

For the checking account, it depends on the legal ownership structure, not just whose names are on it. Here are the key questions you need to answer: 1. Was it set up as a true custodial account under UTMA/UGMA laws? If yes, it's your son's asset. 2. Is it a regular joint account where both you and your son have equal ownership? If yes, you would need to report the portion that belongs to your son as his asset, and your portion as a parent asset. 3. Is it a convenience account where you are just a signer but the money belongs to your son? If yes, it's his asset. Call your bank and ask specifically how the account is legally structured. Don't just go by what you remember from when you opened it - banks sometimes use terms like "custodial" informally even when the account isn't legally set up that way. The FAFSA has gotten much more strict about proper asset reporting in recent years, especially with the new SAI formula.

wait i thought all college savings accounts like 529s and coverdells counted as student assets?? thats how my financial aid office told me to report them last year. if theyre actually parent assets thats a huge difference in the SAI calculation... did i mess up my fafsa??? now im worried

Ugh, I've been dealing with this exact issue for weeks now. Called the Federal Student Aid number like 5 times and kept getting disconnected before reaching anyone who could help. Finally used a service called Claimyr (claimyr.com) that got me through to an actual person at FSA in under 10 minutes. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent confirmed what others are saying here - 529s are parent assets (regardless of who owns them), UTMAs are student assets, and for the checking account, it depends on the legal structure. If your son uses it for his job deposits and it's primarily his money, they recommended reporting it as his asset to be safe. Better to be honest than trigger a verification later.

THE WHOLE SYSTEM IS RIGGED ANYWAY!!! My daughter had $5,200 in her account from working part-time and they counted it at 20% against her aid, while parents with $100K in their accounts only got assessed at 5.64%!!!! HOW IS THAT FAIR??? They PUNISH kids for working and saving! Meanwhile these 529 accounts are just tax shelters for wealthy families that get favorable treatment. The whole FAFSA asset reporting system is designed to screw over middle class families!!!!

btw dont forget to exclude retirement accounts and life insurance!!! those dont count on fafsa at all

After reading through all this, here's a simple formula to follow: 1. 529 plans → Parent assets (always for dependent students) 2. UTMA/UGMA accounts → Student assets (always) 3. Checking/savings accounts → Depends on legal ownership For that checking account, since your son is using it for his job income and spending, the most accurate approach would be to report it as his asset. If you're unsure after talking to the bank, split the difference - report what portion of the balance came from you as your asset, and what portion came from his earnings as his asset. Remember that student assets impact the SAI calculation at a rate of 20%, while parent assets are assessed on a sliding scale up to 5.64% maximum. So properly categorizing these matters quite a bit.

One last thing to keep in mind - the FAFSA now uses the Student Aid Index (SAI) instead of the old EFC, and the formula has some changes. While the asset assessment rates remain the same (up to 5.64% for parents, 20% for students), the SAI calculation has different income protection allowances and other adjustments. So even if you correctly report all assets, the final number might look different than you expect if you're comparing to previous years' results.

Just wanted to add one more consideration - if you're selected for verification (which happens to about 1 in 3 FAFSA applications), you'll need to provide documentation to back up how you reported these assets. Keep records of: - Bank statements showing account ownership structure - 529 plan statements - UTMA account statements - Any documentation from your bank about the legal setup of that checking account The verification process can delay your financial aid, so having clear documentation of your asset reporting decisions will save you headaches later. Also, if you realize you made an error after submitting, you can always go back and make corrections - it's better to fix mistakes early than deal with them during verification or after aid has been disbursed. Good luck with the FAFSA process!

This is such a helpful thread! I'm in a similar situation with my daughter's FAFSA and was completely overwhelmed by the asset reporting requirements. The breakdown of 529s being parent assets (even if the student is the beneficiary) versus UTMAs being student assets really clarifies things. One thing I'd add - if anyone is still in the planning stages before their child starts college, consider the impact of these asset assessment rates when deciding how to save. We had been putting money in a UTMA thinking it was "for our daughter's education," but now I realize we would have been better off maxing out our 529 contributions instead, since they're assessed at the much lower parent rate. @Arjun Patel - definitely call your bank about that checking account structure. When my son turned 18, we had to formally convert his custodial account to a regular account in his name, so the bank should have clear records of what type of account it actually is.

I went through this exact same confusion last year with my twins' FAFSA applications! One thing that might help clarify the checking account situation - most banks have a specific legal designation for true custodial accounts under UTMA/UGMA laws versus regular joint accounts or student accounts with parent access. When you call, ask specifically if the account was established under your state's Uniform Transfers to Minors Act. If it wasn't, and it's just a regular student checking account where you're listed as an authorized user or joint owner, the reporting can be more flexible based on who actually owns the funds. Also, pro tip: take screenshots of your final FAFSA submission showing how you reported each asset category. If you get selected for verification later, having that record of your original decisions will make the process much smoother. The verification officers often ask you to explain your asset reporting logic, especially for accounts with multiple names. The 529 being a parent asset regardless of beneficiary was definitely a pleasant surprise for us - saved us quite a bit on the SAI calculation compared to what we were expecting!

This thread has been incredibly informative! I'm new to the FAFSA process and was feeling completely overwhelmed by the asset reporting requirements. Reading through everyone's experiences and advice has really helped clarify the key distinctions. Just to make sure I understand correctly from all the discussion: - 529 plans = parent assets (assessed up to 5.64%) regardless of who owns them - UTMA/UGMA accounts = student assets (assessed at 20%) because they're legally the student's property - Regular checking/savings accounts = depends on legal ownership structure, not just whose name is on the account The advice about calling the bank to verify the specific legal structure of accounts is gold - I have a similar situation with a "student account" that I'm not sure about. And I love the tip about taking screenshots of the final FAFSA submission for potential verification later. One question: if you discover you made an error in asset reporting after submitting, how difficult is it to make corrections? Is there a deadline for changes, or can you update it anytime before aid is disbursed? Thanks to everyone for sharing their knowledge - this community is such a valuable resource for navigating this confusing process!

This has been such an educational thread! As someone who just started the FAFSA process for my daughter, I was completely lost on asset reporting. The clear breakdown everyone provided really helps - especially understanding that 529s are always parent assets for dependent students regardless of ownership, while UTMAs are always student assets. I'm in a similar boat with a checking account that was opened when my daughter was 16 and I'm listed as a joint owner. Based on the advice here, I'll definitely call the bank to ask specifically about whether it was established under UTMA laws or if it's just a regular joint account. The distinction seems crucial for proper reporting. One thing I'm curious about - for those who have been through verification, how detailed do they get about the source of funds in student accounts? My daughter has about $4,000 from summer jobs and birthday money mixed together. Do I need to try to separate those amounts, or is reporting the total balance as her asset sufficient? Thanks again to everyone for sharing their experiences. This community has been way more helpful than the official FAFSA help resources!

This thread has been incredibly helpful! I'm going through the same FAFSA process right now and was equally confused about asset reporting. The clarity everyone provided about 529s being parent assets regardless of ownership versus UTMAs always being student assets really clears things up. I have a question that builds on what others have asked - what about ESA (Educational Savings Account) funds? Are those treated the same as 529 plans for FAFSA purposes, or do they have different reporting rules? I have about $8,000 in a Coverdell ESA for my son and want to make sure I'm categorizing it correctly. Also, for anyone still working through this - I found the Federal Student Aid handbook online has a detailed asset reporting chart that breaks down different account types. It's buried in the technical documentation but might be worth checking if you want the official guidance rather than relying on phone support (though the Claimyr service @Maya Diaz mentioned sounds like a great backup option). Thanks to everyone for sharing their experiences - this is exactly the kind of practical advice that makes navigating FAFSA so much easier!

This thread has been a lifesaver! I'm a first-time FAFSA filer and was completely overwhelmed by the asset reporting requirements. Reading through everyone's experiences has given me so much clarity on the key distinctions. One thing I wanted to add that might help others - I just went through this process last month and discovered that some banks use the term "custodial account" very loosely in their marketing materials, even when the account isn't legally established under UTMA/UGMA laws. When I called to verify my daughter's account status, I had to speak to three different representatives before finding someone who could definitively tell me whether it was a true custodial account or just a student account with parental access. Also, for anyone dealing with multiple types of accounts like the original poster, I found it helpful to create a simple spreadsheet listing each account, its legal structure, current balance, and which FAFSA category it falls under. This made the actual form completion much less stressful and gave me confidence that I was reporting everything correctly. The 20% vs 5.64% assessment rate difference is huge - definitely worth taking the time to get these classifications right! Thanks to everyone who shared their knowledge here.

As someone who just completed the FAFSA process for my twins this year, I can't stress enough how valuable this thread is! The asset reporting confusion is so real, and I made several mistakes on my first attempt that I had to go back and correct. One thing I'd add that hasn't been mentioned yet - if you have multiple 529 plans (like we do - one for each twin), you report the TOTAL of all 529 balances as parent assets, not separately. Also, some states have their own 529 programs that send out confusing tax documents that make it look like the student should report them as income, but that's completely separate from the asset reporting on FAFSA. The verification process really isn't as scary as it sounds if you keep good records. We got selected and just had to provide bank statements and 529 statements as of the FAFSA date. The key is using the same "snapshot" date for all your asset values - don't mix balances from different dates. @Arjun Patel - definitely get that checking account clarified with the bank. In my experience, if your son has been depositing his job income there and using it freely, it's functionally his account regardless of the original setup. Better to be conservative and report it as his asset than risk issues during verification.

This has been an incredibly informative thread for someone just starting the FAFSA process! I'm in a very similar situation with my daughter - we have a 529 plan, a savings account that was opened when she was a minor, and I was completely confused about the reporting requirements. The key takeaways I'm getting are: - 529 plans are ALWAYS parent assets for dependent students (great news since they're assessed at the lower rate!) - True UTMA/UGMA accounts are always student assets - Regular checking/savings accounts depend on the actual legal ownership structure What's been most helpful is the advice to call the bank and ask specifically about UTMA/UGMA designation rather than just accepting terms like "custodial" or "student account." I had no idea banks use these terms so loosely! One question for the group - if my daughter's savings account has money from both gifts from grandparents AND her part-time job earnings all mixed together, do I need to try to separate those amounts for reporting purposes, or can I just report the total balance as her asset? The account balance is around $3,200 total. Thanks to everyone for sharing such detailed, practical advice. This community is amazing!

This thread has been such a valuable resource! I'm new to the FAFSA process and was feeling completely lost about asset reporting until I found this discussion. The breakdown everyone has provided really clarifies the key distinctions between different account types. I'm in a similar situation with multiple accounts for my son, and I wanted to share what I learned from calling my bank today after reading all the advice here. When I asked specifically about UTMA/UGMA designation (rather than just asking if it was "custodial"), they were able to pull up the exact legal structure. Turns out what I thought was a custodial account was actually just a joint checking account, which changes how I need to report it completely! One thing I haven't seen mentioned yet - for those dealing with accounts that have both parent and student contributions, some financial aid offices recommend keeping a simple log of major deposits/sources just in case verification gets really detailed. My friend's daughter was asked to explain a large deposit during verification, so having some basic records can be helpful. The 20% vs 5.64% assessment rate difference really is significant. Taking the time to get these classifications right is definitely worth the effort. Thank you to everyone who has shared their experiences - it's made this overwhelming process so much more manageable!

This thread has been absolutely invaluable! As someone completely new to the FAFSA process, I was drowning in confusion about asset reporting until I stumbled upon this discussion. The collective wisdom shared here has been far more helpful than any official resource I've found. I'm dealing with a very similar situation - my daughter has a mix of accounts including a 529 plan, a savings account from when she was younger, and earnings from her part-time job. Reading through everyone's experiences has given me the confidence to tackle this systematically rather than just guessing. The key insights I'm taking away: - Call the bank and ask specifically about UTMA/UGMA legal designation, not just generic terms - 529 plans are always parent assets for dependent students (huge relief!) - Document everything with a consistent snapshot date for verification purposes - When in doubt, err on the side of conservative reporting I especially appreciate @Freya Andersen's experience calling the bank and discovering her "custodial account" was actually just a joint account - that's exactly the kind of real-world outcome that shows how important it is to verify these details rather than make assumptions. One quick question - for those who have completed this process, how long did it typically take to get clarity from your bank about the legal structure of accounts? I'm hoping to get this sorted out quickly so I can finish the FAFSA submission. Thanks again to everyone for creating such a supportive and informative discussion!

This thread has been incredibly helpful for someone just starting the FAFSA journey! I'm in a very similar position with my son's application and was completely overwhelmed by the asset reporting requirements until I found this discussion. Reading through everyone's experiences has really clarified the main categories: - 529 plans = parent assets (always for dependent students, regardless of ownership) - UTMA/UGMA accounts = student assets (legally the student's property) - Regular accounts = depends on actual legal ownership structure What I found most valuable was the advice about calling the bank to ask specifically about UTMA/UGMA designation rather than just accepting terms like "custodial" or "student account." It's clear that banks use these terms pretty loosely in their marketing. I have a question for the group - my son has been working part-time for about 8 months and has been depositing his paychecks into what we originally set up as a "student savings account" when he was 15. The account has both our names on it, but he's been the one making all the deposits and withdrawals. Based on what I'm reading here, it sounds like I should report this as his asset since he's been using it as his primary spending account, even though I'm technically listed as a joint owner. Does that sound right? Also, thank you to everyone who mentioned the importance of keeping good documentation for potential verification. I had no idea that was something to prepare for, but it makes total sense to have bank statements ready from the snapshot date. This community is amazing - I feel so much more confident about tackling the FAFSA now!

This thread has been such a goldmine of information! As another newcomer to the FAFSA process, I was completely lost on asset reporting until I found this discussion. The confusion around custodial vs. regular accounts is so real - I had no idea that banks use terms like "custodial" so loosely in their marketing materials. I'm in a similar boat with a checking account for my daughter that was opened when she was 16. Reading through all the advice here, I'm definitely going to call the bank tomorrow and ask specifically about UTMA/UGMA designation rather than just accepting whatever generic terms they use. One thing that's been really eye-opening is learning about the massive difference between the 20% student asset assessment rate versus the up to 5.64% parent rate. That alone makes it worth taking the time to get these classifications exactly right. The 529 being a parent asset regardless of ownership is such great news - I was worried about our $18,000 balance being hit with the higher student rate. Quick question for those who've been through verification - do they typically ask for statements from the exact FAFSA filing date, or is it acceptable to provide statements from within a few days of that date? I want to make sure I have the right documentation ready just in case. Thanks to everyone for sharing such detailed, practical advice. This community has been infinitely more helpful than any official FAFSA resource I've found!