FAFSA asset strategy - will my daughter's savings from age 14 hurt her financial aid?

Student assets are indeed assessed at 20% in the SAI calculation, while parent assets are assessed at a maximum of 5.64%. So yes, your daughter's savings could impact her aid eligibility more significantly than if those funds were in your name. As for timing - FAFSA now uses the "prior-prior year" for income (so her junior year FAFSA will use your tax info from when she was a freshman), but asset information is based on the date you submit the application. It's a snapshot of that moment, not a lookback period. That said, be careful about making obvious moves purely to game the system. Financial aid offices can request additional information if something seems suspicious. Some options to consider: 1. Using the money for legitimate educational expenses (computer for college, test prep, etc.) 2. Moving funds to a 529 in your name (student-owned 529s are still considered student assets) 3. Using it to pay down family debt (if applicable) You definitely want to make any moves well before application time, not the day before.

LOL the whole system is rigged anyway. My kid had like $3k in savings and got almost nothing while her friend whose parents hide all their money in their business got a full ride. Its all BS. Tell your daughter to buy herself something nice with that money because the FAFSA is gonna screw her over no matter what you do.

Hve u considered maybe putting the $ in ur name instead? Thats what we did for my son. He had about 9k from working at the grocery store and my brother said parent assets aren't counted as much. We just added him to our account then took his name off and problem solved!!

This is something I dealt with last year with my son. What we learned is that the FAFSA basically takes a snapshot of assets at the time you submit the application. They don't look back through months of statements trying to catch you moving money around. Our financial aid advisor suggested using student funds for appropriate educational expenses before filing. My son used his savings for: 1. A laptop for college 2. Test prep courses and materials 3. Paying for AP exams 4. College application fees These were all legitimate expenses he would have had anyway, and it reduced his reportable assets. We did this about 3-4 months before filing. For a 529, that's a good option but remember only a parent-owned 529 gets the preferential treatment. A student-owned 529 is still counted as a student asset at the higher rate.

I was in the exact same boat 2 years ago!!! I was so frustrated because my daughter had saved almost $15k from her jobs and babysitting since middle school. We talked to three different financial aid advisors and got three different answers about what to do! We ended up moving some of her money into paying for her senior year expenses (yearbook, prom, graduation stuff) and some into a car that she needed for college anyway. That brought her assets down to about $5k which seemed more reasonable. The most important thing I learned: do what changes you're going to do WELL BEFORE filling out the FAFSA. Like months before, not days before. While they don't specifically look back at account history, they can if they have questions. Better safe than sorry!

Every body talking about moving money around but nobody mentioning the consequences!!! The FAFSA has penalties for hiding assets and they AUDIT people!! My cousin tried to move money around and got FLAGGED and then they went through ALL their accounts with a fine toothed comb. Be careful what advice you follow on here! The safest thing is just be HONEST. Maybe use some of the money for legitimate expenses like college visits or a computer but DON'T try to play games with the government!!!

One thing that hasn't been mentioned: if your income is high enough, your daughter might not qualify for need-based aid regardless of her assets. The new FAFSA (2025-2026) uses the Student Aid Index (SAI) instead of the old Expected Family Contribution (EFC). Before making major financial moves, you might want to run some calculations with the Federal Student Aid Estimator to see if her assets would actually impact her eligibility given your family's overall financial situation.

Try calling the finacial aid office directly to ask about you're options!! I spent HOURS trying to get through to someone at Federal Student Aid last year for a similar question and kept getting disconnected or waiting forever.

Something I forgot to mention in my earlier comment - don't forget that the CSS Profile (used by many private colleges) has different rules than the FAFSA. It's more detailed and looks at more of your assets, including home equity in some cases. If your daughter is applying to private schools, you might need different strategies for CSS vs FAFSA.

To answer your follow-up question about timing for the 529 move - if you decide to move funds to a 529 in your name, I'd recommend doing this at least 6-12 months before FAFSA filing if possible. While there's no specific lookback period defined, making financial moves well in advance helps establish that they weren't done solely to manipulate aid eligibility. And regarding your question about the impact - at the 20% assessment rate, each $1,000 in your daughter's name could reduce aid eligibility by about $200. So $12,800 could potentially reduce aid by approximately $2,560 compared to if those assets were in your name (where they'd impact aid by about $720 at the maximum 5.64% rate). That's a difference of around $1,840 in potential aid - definitely significant enough to consider legitimate planning strategies.

As someone who just went through this process with my twin daughters last year, I want to echo what others have said about timing and legitimacy. We had a similar situation where both girls had substantial savings from summer jobs. What worked for us was creating a budget for their actual college-related expenses over the next year: SAT/ACT prep courses, college visits, application fees, deposits, and yes - laptops they'd need anyway. We also prepaid some expenses like their senior portraits and graduation fees. The key insight our financial advisor gave us: think of it as accelerating expenses you'd pay anyway, not hiding money. This approach felt honest and still achieved the goal of reducing reportable assets. One practical tip: keep receipts for everything. While FAFSA doesn't typically audit these decisions, having documentation shows these were legitimate educational expenses if questions ever arise. Also, don't forget that some states have their own financial aid programs with different asset assessment rules. Check what your state offers - you might be optimizing for the wrong calculation if state aid is more generous than federal aid in your situation.

One additional consideration that hasn't been fully addressed: if your daughter is planning to work during college, her ongoing earnings will continue to be assessed as student income at 50% above the income protection allowance (around $7,310 for 2024-25). So while addressing the current asset situation is important, also think about her work plans for college years. If she's planning to work summers or part-time during school, you might want to discuss strategies for those future earnings too - like maximizing contributions to retirement accounts if she's eligible, or timing when she receives payment for work. Also, since she's been so responsible with saving, make sure she understands these financial aid implications as she continues working. Some families find it helpful to have the student contribute directly to college expenses rather than saving in their own accounts, effectively "spending down" the assets on education as they earn. The fact that she's been working and saving since 14 is actually a huge asset for college applications beyond just the financial aspect - that work history and financial responsibility will look great to admissions committees!