College Financial Aid

Many of our clients have college age children and are planning to apply for college financial aid.  According to the College Board, the average cost of tuition and fees per student for the 2016–2017 school year was $33,480 at private universities, and $9,650 for state residents at public colleges.  These numbers are expected to rise for the 2017-2018 school year.


Now it is FAFSA time again and our clients, as parents and students, are getting ready to apply to colleges and start to research financial aid.

Invariably, we will get several calls from clients asking if their trust or the trust they have from their grandparents counts toward their assets or income on the FAFSA and other financial aid applications.  Unfortunately, it does.  This is true even if the trust is restricted to distributions at certain ages, or an income stream, or for certain standards.  In fact, there are very few assets that do not count as parental assets or count against the student’s assets.

The assets we get the most questions about include the following:

  1. Retirement accounts.    401(k)s, ROTHs and traditional IRAs do not count against your EFC (expected family contribution), UNLESS you make a tax free withdrawal from your ROTH to pay for educational expenses.   The withdrawal will be counted as income.
  2. UTMA/UGMA accounts.   UTMA and UGMA accounts will be counted as the student’s assets for FAFSA.
  3. Family owned business.    If the family owned business is closely held and there are fewer than 100 employees it will not be counted.  This does not include LLCs with only 1 real estate asset (in most cases).
  4. Cash value of Life Insurance does not count on FAFSA.    *Note that some annuities (which are life insurance products) do count.
  5. 529 plans are counted as a student’s asset.

The rules regarding financial aid are complex and include several adjustments and changes this year.

There are many EFC calculators online and other resources for parents struggling with these decisions.  If you are concerned about whether or not your trusts will count against you or any other planning ramifications please contact us at