FAFSA strategy: Where to invest CC savings to lower SAI when transferring to university?

You're thinking strategically, which is excellent! Retirement accounts like Roth IRAs aren't reported as assets on the FAFSA, so that's generally a good place to shelter money. Just remember that while you can withdraw Roth IRA contributions penalty-free at any time, you'd want to have that money accessible when needed without depleting your actual retirement funds. Another option to consider might be a 529 plan. While 529s are reportable assets, they're assessed at a maximum rate of 5.64% in the SAI formula when parent-owned (vs. 20% for student assets). So $10,000 in a 529 would only increase your SAI by about $564. Keep in mind that for the 2025-2026 FAFSA, the simplified formula means many middle-income families may qualify for more aid than previously.

put it in bitcoin lol 🚀 🚀 🚀 jk dont do that. my sister did communtiy college then transfer route and my parents just kept the extra $ in their normal checking account. big mistake! the fasfa counted every penny when she applied to state university. definitely do the retirement account thing.

I'm in your EXACT situation with my son! What I learned is you can absolutely contribute to your Roth IRA as long as you have earned income to match those contributions (so don't exceed what you actually earn). The new FAFSA doesn't count retirement assets at all! But watch out - if you suddenly make a huge deposit right before filing FAFSA, it could raise red flags. I'm spreading out my contributions evenly to avoid issues. Our financial advisor suggested regular monthly contributions rather than lump sums. Also, have you looked into CSS Profile schools? They have different rules and DO count some retirement assets! Just something to be aware of if your daughter might transfer to a school that requires the CSS Profile.

While retirement accounts aren't included in FAFSA calculations, there are a few important considerations: 1. Annual Roth IRA contribution limits ($7,000 in 2025 if you're under 50) might restrict how much you can shelter 2. Some prestigious private universities use the CSS Profile, which DOES count retirement assets above a certain threshold 3. If you make substantially larger retirement contributions than your normal pattern, it could trigger verification questions A balanced approach often works best - some in retirement accounts and some in a 529. The 529 has the added benefit of tax-free growth if used for qualified education expenses. Also consider paying down high-interest debt, as this effectively "earns" you the interest rate while reducing your asset base.

I tried calling Federal Student Aid to ask about this EXACT question last month and spent 3 hours on hold before getting disconnected. So frustrating! I finally used Claimyr (claimyr.com) to get through to a FAFSA agent without the wait. They have this system that holds your place in line and calls you when an agent is ready. There's a video demo here: https://youtu.be/TbC8dZQWYNQ The agent confirmed retirement accounts aren't reported on FAFSA, but warned that large transfers right before filing could raise red flags. They suggested consistent contributions rather than suspicious timing of large deposits.

DONT trust everything u read on here!!!! My cousin put all his money in his IRA thinking it wouldnt count for FAFSA and then his kid got NO FINANCIAL AID AT ALL when transfering from community college!!!! turns out some schools look at everything no matter what FAFSA says they do. the whole system is designed to screw over middle class families who are trying to be smart with there money. anyone who says otherwise is nieve

Something no one has mentioned yet - the timing of when these funds will be needed matters significantly in your strategy. If your daughter starts community college in Fall 2025, she'd potentially transfer for Fall 2027. This means she'd file that transfer FAFSA in October 2026, which would look at your 2025 tax information (the "prior-prior year"). So your 2025 income and assets (as of the date you file) are what matter most. This gives you some planning opportunities: 1. Maximize 2025 retirement contributions to reduce your AGI 2. Time major purchases or investments strategically 3. Consider accelerating income into 2024 or deferring to 2026 when possible The SAI formula primarily looks at income rather than assets for most middle-income families, so managing your 2025 AGI is crucial.

One strategy I used when my son transferred from CC to university was splitting our savings between my Roth IRA (for the FAFSA protection) and paying down our mortgage (reducing countable assets while essentially "saving" by building equity). This worked really well for us - we got a much better aid package than expected. Just be careful with the Roth - you can only contribute earned income up to the annual limit. Don't exceed this or you'll face penalties that defeat the purpose of your strategy.

my brother put his kids college money in pokemon cards lol. but seriously just use a 529 cuz u can use it for the community college costs too not just when they transfer