Does a Parents Savings Account Affect Financial Aid?
It is a common question for college-bound students and their parents: does a parents savings account affect financial aid? The answer is yes, as cash savings are counted on the Free Application for Federal Student Aid (FAFSA) when calculating your Expected Family Contribution (EFC).
The EFC is the amount of money that the federal government expects you and your family to contribute to your college education. The EFC is based on the information that you provide on the FAFSA, including your parents’ income, assets, and savings.
When it comes to savings, the FAFSA considers both the amount of money in the account and the amount of time the money has been in the account. The longer the money has been in the account, the less it will be counted as an asset. This is because the federal government assumes that the money has been used to pay for living expenses, such as rent and utilities.
The FAFSA also considers the type of savings account that your parents have. If your parents have a 529 college savings plan, the money in the account will not be counted as an asset on the FAFSA. This is because the money in the account is intended to be used for college expenses.
It is important to note that the FAFSA does not consider the value of your parents’ home or other real estate when calculating your EFC. However, if your parents have a large amount of money in a savings account, it could still affect your financial aid.
If you are concerned about how your parents’ savings account will affect your financial aid, it is important to talk to a financial aid advisor. They can help you understand how the FAFSA works and what you can do to maximize your financial aid eligibility.
In conclusion, a parents savings account can affect financial aid. The amount of money in the account and the type of account will be taken into consideration when calculating your EFC. It is important to talk to a financial aid advisor to understand how your parents’ savings account will affect your financial aid eligibility.