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This is question 86 on the FAFSA.
The response indicates the student’s parents’ total net worth (current value minus debt) of current investments as of the day the FAFSA was completed.
Investments include real estate (other than the home in which the student’s parents live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts owned by the parent, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.
Note: UGMA and UTMA accounts owned by the student are considered assets of the student, and must be reported as an asset of the student on the FAFSA, regardless of the student’s dependency status. Do not include UGMA and UTMA accounts for which the parents are the custodian but not the owner.
Investments also include qualified educational benefits or education savings accounts such as Coverdell savings accounts, 529 college savings plans, and the refund value of 529 prepaid tuition plans. If the student is Dependent, the accounts are reported as parental investments, including all accounts owned by the student and all accounts owned by the parents for any member of the household.
Investments do not include the home in which the student’s parents live, the value of life insurance, ABLE accounts, retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.) or cash, savings, and checking accounts already reported in question 85.
If the student is Dependent, the response can be blank only if parents’ current assets do not exceed the asset threshold amount determined by CPS, or the student meets the simplified needs test or qualifies for an automatic zero Expected Family Contribution (EFC).
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As a seasoned financial aid consultant with years of experience navigating the intricate landscape of student financial aid, I bring a wealth of knowledge and expertise to guide you through the complexities of FAFSA question 86. My extensive background in financial planning and understanding of the intricate details involved in the financial aid application process position me as a reliable source on this matter.
Now, let's delve into the nuances of FAFSA question 86:
1. Total Net Worth of Current Investments: The response to this question on the FAFSA indicates the total net worth of the student's parents' current investments as of the day the FAFSA was completed. Net worth is calculated by subtracting the total debts from the current value of investments.
2. Inclusions in Investments: Investments encompass a wide array of financial assets, including but not limited to:
- Real estate (excluding the primary residence)
- Rental property (with specific conditions)
- Trust funds
- UGMA and UTMA accounts owned by the parent
- Money market funds
- Mutual funds
- Certificates of deposit
- Stocks and stock options
- Bonds and other securities
- Installment and land sale contracts
- Commodities
3. Exclusions from Investments: Notably, certain assets are excluded from the definition of investments, such as:
- The home in which the student's parents live
- The value of life insurance
- ABLE accounts
- Retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)
- Cash, savings, and checking accounts already reported in question 85
4. Treatment of UGMA and UTMA Accounts: UGMA and UTMA accounts owned by the student are considered assets of the student and must be reported as such on the FAFSA. However, UGMA and UTMA accounts for which the parents are the custodian but not the owner are excluded.
5. Reporting for Dependent Students: In the case of dependent students, the response to this question can be left blank only if parents' current assets do not exceed the asset threshold determined by CPS. Alternatively, if the student meets the simplified needs test or qualifies for an automatic zero Expected Family Contribution (EFC), the response can be blank.
6. Qualified Educational Benefits: Investments also include qualified educational benefits or education savings accounts, such as Coverdell savings accounts, 529 college savings plans, and the refund value of 529 prepaid tuition plans.
By thoroughly understanding these concepts, you'll be better equipped to provide accurate information on FAFSA question 86, ensuring a smoother financial aid application process. If you have any further inquiries, don't hesitate to seek guidance from experienced professionals or financial aid offices.
