How Your Financial Assets Impact Financial Aid Eligibility

The amount of financial aid your children qualify for is heavily dependent on both your assets and theirs. All students interested in financial aid for college must fill out a FAFSA form (Free Application for Federal Student Aid). Let’s take a look at the formula FAFSA uses to determine financial need and the part your family assets play in it.

Parental Assets
FAFSA expects parents to contribute toward their child’s cost of college. The amount they expect the family to contribute is called the Expected Family Contribution (EFC). If the cost of college is more than the EFC, the difference is the amount of the student’s financial need.

EFC is determined by assigning a percentage of the parental assets and student assets toward payment of annual college costs. Of course, they don’t expect parents to spend their entire life savings on college so parents are given an emergency reserve allowance that’s subtracted from their total asset value. After they factor in the emergency reserve allowance, the remainder is called the available asset value. From that amount, they can expect to see 5.6% assigned as family contribution each year.

Also included is the income of both parents (except certain family-owned business income). After allowances, 22 to 47 percent of their income is included in the total asset value, from which the before mentioned 5.6% would be assigned as the expected family contribution.

Certain parental assets are not counted by the FAFSA, including home equity, retirement assets, life insurance cash values, and non-qualified annuities.

Student Assets
All custodial accounts are considered the student’s personal assets when it comes to determining financial aid eligibility. The FAFSA formula attributes 20 to 25 percent of these assets to the EFC each year. Because of this, it may be a good idea to consider transferring UGMA/UTMA assets into a college plan owned by the parent so they can be treated like parental assets and only 5.64 percent is attributed to EFC.

A student’s income also counts toward their expected contribution. Generally, 50 percent of their net income (minus certain allowances) is included. Any savings they have is also included at 20 to 25 percent.

Students with Disabilities
Some students with disabilities find additional financial resources through their state’s Department of Vocational Rehab (VR) agency. While rules vary by state, some VR funds may be available based solely on the student’s resources without consideration for the parental resources. However, the parental resources must still be reported on the FAFSA form, even when the student expects VR financial support.

Even with all of these assets considered, a student may still qualify for financial aid, subsidized loans, and scholarships. That’s why it’s important to complete the FAFSA and look for other supplemental funding opportunities, even if you think your assets might push you over the limit.

This information is not intended to be a substitute for specific individualized tax, legal or estate planning advice. Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed, and the accuracy of the information should be independently verified.

Adrianna Rocha

Client Relations Specialist

240-379-6929 V
240-439-6889 VP
512-379-6909 FAX
info@kramerwealth.com

Since joining Kramer Wealth Managers in 2021, Adrianna Rocha has been a client service dynamo, ensuring every client interaction is seamless and delightful. She’s the go-to guru for all things client experience, handling everything from videophone chats to scheduling meetings and processing forms with a smile. Her goal? To make sure every client feels valued and well-cared-for.

Adrianna graduated with a Bachelor of Arts in Communication Studies from Gallaudet University in 2017 and brings nearly a decade of customer service experience to our team. She thrives on personal connections, celebrating both her achievements and those of our clients. When she’s not busy at work, you might find her indulging in her passions—dogs, houseplants, essential oils, and the tantalizing flavors of Mexican cuisine. Proud fur-mama to her adorable Aussie mix, Ziva. Adrianna brings a touch of warmth and enthusiasm to everything she does.

Q: What’s your favorite part of working with clients?

A:  I enjoy client service because it allows me to help people and make a positive impact. Using my listening skills to understand client needs and solve problems is satisfying. I love turning negative experiences positive and the daily variety of challenges.

Adrianna is not registered with Osaic Wealth.

Adrianna Rocha

Client Relations Specialist

240-379-6929 V
240-439-6889 VP
512-379-6909 FAX
info@kramerwealth.com

Adrianna Rocha joined Kramer Wealth Managers in 2021.

Adrianna is responsible for client experiences and service. As part of the customer service team, she strives to help and provide top-notch service to our clients. As part of her role, she communicates with clients through videophone, schedules client meetings, prepares and processes forms, and gathers information for our advisors.

Adrianna Rocha graduated with a Bachelor of Arts in Communication Studies from Gallaudet University in 2017. Before she joined our team, she worked in the customer service industry for nearly a decade. She excels in human-to-human relations and takes pride in not only her own accomplishments, but her clients’ as well. Adrianna enjoys chatting about her slight obsession with dogs, houseplants, essential oils, and food: especially Mexican food! She is also a proud fur-mama to her beautiful Aussie-mixed pup, Ziva.

Adrianna is not registered with Osaic Wealth.

Jack Morley

Client Relations Specialist

240-379-6929 V
240-439-6889 VP
240-379-6909 FAX
info@kramerwealth.com

Jack Morley has been a vital part of the Kramer Wealth Managers team since 2010, starting with various projects and officially joining full-time in 2013. As our go-to Account Service Specialist, Jack is the friendly face and reliable voice who ensures a smooth client experience. He’s the linchpin in client communications, handling account maintenance and bridging connections between clients and our advisory team.

A 1998 graduate of Gallaudet University with a BA in Psychology, Jack brings a wealth of customer service experience from retail and human services. His handyman skills are a bonus, making him the resident problem-solver and DIY enthusiast. Outside the office, Jack enjoys long walks with his dog Bailey.

Married for 25 years to his wonderful wife, Monica, Jack is also the devoted dad to two dynamic daughters who keep him on his toes. When he’s not walking Bailey—he’s likely tinkering on a new project or spending quality time with his family.

Q: What’s your favorite part of working with clients?

A:  I enjoy assisting clients in maintaining their accounts and ensuring there is a smooth transition in between changes being made within their accounts.

Jack is not registered with Osaic Wealth.