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Applying for financial aid towards college tuition starts with submitting the Free Application for Federal Student Aid (FAFSA). When filling in details of the family’s finances on the FAFSA, all assets owned by parents and dependent students must be reported separately. This is because the parent’s assets and the student’s assets are evaluated differently.

Here’s a basic breakdown of how student and parent assets are assessed and how they affect your financial aid package.

Student Assets

Colleges expect that up to 20% of the assets owned by a dependent student will be used toward college expenses. This is regardless of the source of the funds. Assets funded by other people’s money are still counted for the purpose of calculating financial aid eligibility.

Parent Assets

Parents are expected to use up to 5.64% of their unprotected assets to cover part of their child’s college expenses. Parents’ unprotected assets include balances in savings, checking and brokerage accounts, investment real estate other than the primary home, 529 college savings, ETFs, and mutual funds.

The parent’s protected assets are not counted when calculating financial aida eligibility.

As you can see, in general, the student’s financial assets have a far greater impact on financial aid eligibility as compared to the parent’s financial assets.

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