nunya

I need to cash a savings bond and didn't know if it would be counted as income or what on FAFSA? Or are savings bonds even considered by them?

gcnorth

If you keep the bond you would record the value of the bond as an asset on the day you file FAFSA. No interest income would be earned and none would be reported.

When you cash the bond, you may earn interest income. That will generate a 1099, be reported as income on your tax return and reported as income on FAFSA. If it's a tax-free bond you would report the income as non taxable income on FAFSA.

On the asset side you would report whatever cash is left over as an asset on the day you file FAFSA.

nunya

In other words, it's best to cash it in now and pay off my dual credit classes so I'll only have to report the interest rather than having the whole thing as an asset, right?

swimcatsmom

Not necesarily. A much larger % of income goes to the EFC than of assets. If the bond is the students then 50% of income (over the protected income allowance) goes to the EFC, while 20% of an asset goes to the EFC. If the bond beglongs to the parent then 5.6% of an asset goes to the EFC (if it is over the protected asset allowance) and between 22%-47% of income. So it would really depend on a whole lot of factors - other income, other assets (for parents -students have no asset protection).

Having said that, if you need the money to pay for a class then do you have a choice?

nunya

Now I'm more confused than ever. Yes, it's in the "student's" name and it's either going to be cashed out now or when I start college in the fall. I really need the money now but I hate to cash it in if it will mess up next year's FAFSA somehow.

swimcatsmom

Do you have any income this year?