Where to invest college savings that won't increase FAFSA SAI for community college transfer plan?

Smart thinking! Retirement accounts (401k, IRA, Roth IRA) are definitely *not* reported on FAFSA. That's def one good strategy. Another place I put $ was paying down our mortgage faster - home equity isn't counted either. Just dont put it in accounts in ur kid's name cuz that counts at like 20% vs parental assets at only like 5%.

This is a common question and you're approaching it wisely. The 2025-2026 FAFSA doesn't count qualified retirement accounts (401k, IRA, Roth IRA) in the SAI formula. However, remember a few important points: 1. 529 plans owned by parents ARE counted as parental assets (affecting SAI at around 5.64% of value) 2. Paying down debt (mortgage, credit cards) can be effective since neither home equity nor reduced debt is factored into FAFSA 3. Roth IRA contributions can later be withdrawn tax-free for education expenses (though not earnings unless you meet certain requirements) 4. Remember that your strategy depends on timing - assets are reported based on a specific date (for 2025-2026 FAFSA, it's your financial situation from 2023) Timing community college right can give you a significant advantage in this planning.

been thru this with my oldest, def do the community college route! saved us like $40k! but watch out cuz some univers. don't accept all the credits so check with the 4yr school FIRST about which classes to take & make sure they WILL transfer!!

The FAFSA system is RIGGED against middle class families!!! My son did the CC route and we saved every penny for 2 years but when we applied for aid for his transfer year the system STILL said we could afford $22,000 per year which was INSANE. They don't care if you have other expenses like medical bills or helping elderly parents. Don't expect much help even if you hide your money in retirement accounts.

This is a solid plan for managing college costs. While retirement accounts are excluded from FAFSA calculations, there are additional strategies to consider: 1. Life insurance cash values are not reportable assets on FAFSA 2. Small business ownership (if applicable) has certain exemptions 3. Consider UTMA/UGMA account spending before the base year One more important note: If your student plans to apply for institutional aid (not just federal), many private universities use the CSS Profile which DOES count retirement accounts in some cases. Always check specific school requirements if applying to private institutions.

After weeks of trying to reach someone at Federal Student Aid to ask similar questions, I finally used Claimyr (claimyr.com) to get through to an actual person. They got me connected to a FAFSA rep in under 20 minutes who answered all my asset reporting questions. There's a video showing how it works: https://youtu.be/TbC8dZQWYNQ The rep confirmed retirement accounts are excluded and gave me specific advice for our situation with our son's transfer from CC to university. Having a real conversation instead of trying to interpret the website was so helpful!

we did exactly what ur planning! saved during cc years by putting extra $$ in my 403b (teacher) and my wife's IRA. worked great. but dont forget to look for transfer scholarships too. my daughter got $7500/yr at her 4yr school just for having a 3.8 gpa at community college!

umm what about that new FAFSA simplificatin? isnt it different now? thought they changed how they calculate stuff?

my kid did comm college for 1yr but HATED IT so we had to scramble 2 get him into a 4-yr & lost most of our strategies. make sure ur kid is 100% onboard with the plan & will stick with it!!!!

One additional consideration: the timing of asset reallocation matters. The 2025-2026 FAFSA (which would likely be when your student transfers to a university) will use your family's financial information from 2023 tax year. So any strategic financial moves should ideally be completed before the relevant tax year. Also, don't overlook merit aid opportunities. Many universities offer specific transfer student scholarships that are based on academic performance rather than financial need. By maintaining a high GPA at community college, your student could qualify for significant merit-based funds that aren't affected by your asset positioning. One final note: The Asset Protection Allowance has been dramatically reduced in recent years, so strategic asset positioning is more important than ever for middle-income families.

Great strategy! I'm in a similar boat with my son who's halfway through CC right now. One thing that's worked well for us is splitting our savings between maxing out my Roth IRA contributions and paying extra toward our mortgage principal. The Roth gives us flexibility since we can withdraw contributions penalty-free for education if needed, plus it doesn't count on FAFSA. Also wanted to mention - check if your state has any special college savings incentives beyond 529s. Some states have programs that offer tax benefits for certain types of education savings that might work better for your timeline. And definitely start researching transfer agreements between your local CC and target universities early - some have guaranteed admission programs if your daughter meets certain GPA requirements, which could save you stress later! The community college route is such a smart financial move. You're setting your daughter up for success without the crushing debt load.