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  • Writer's pictureNeil Chacko, CFP®, CKA®

What is Counted in the Formulas for Financial Aid?

By Neil Chacko, CFP®, CKA®




There are several factors that go into the formulas for financial aid. In addition, a school that uses the FAFSA as the basis for their financial aid decision differs in what they look for than a school that uses the CSS Profile(The CSS Profile is used by about 200 colleges and universities; you can find the current institutions that use this form here:



The main factors that FAFSA-based colleges and universities use are:

1. Income—parent and child

2. Non-retirement accounts held by parent and child including checking, savings and brokerage accounts.

3. 529 College accounts

4. Custodial accounts


In addition to the above, CSS Profile schools will also consider the amount of home equity in your primary home. Some will ask for information around your retirement accounts, annuities and life insurance cash values, and even the types of vehicles you drive although they state that they do not consider this in their financial aid formulas.


The FAFSA treats parent-held assets less harshly than student money when calculating a family’s eligibility for financial aid. This policy reflects the reality that parents need to be accumulating money for their own retirement and other financial needs.

Under the FAFSA formula, parent assets are assessed at up to 5.64%, whereas student-held assets are assessed at 20%. For example, if a family has $80,000 in brokerage accounts and 529’s (non-retirement accounts) that are in the parent’s name, the impact towards financial aid is $4,512 ($80,000 * 5.64%). In this family’s case, their EFC (Expected Family Contribution) would increase by $4,512. If these assets were instead in the student’s name, the EFC would increase by $16,000 ($80,000 * 20%) which would significantly reduce aid.


For the CSS profile, parent assets are assessed at 5% and student assets are assessed at 25%. The CSS Profile automatically shelters some parental assets and it is far more generous to parents. Unfortunately, The College Board, which owns the Profile, does not divulge the formula they use.


Both the FAFSA and CSS Profile made concessions in their formula when there is more than one child attending college at the same time. This discount, however, will be going away with the upcoming 2024-2025 school year when the FAFSA Simplification Act takes full effect, unless Congress takes action to change it.


In next month’s blogpost, we will discuss how aid from grandparents, or other family and friends, can affect the financial aid formula.


If you would like to schedule a free, no obligation call to discuss your situation or answer any questions, you may do so at the below link:



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