I was stunned today to see the 2016-17 asset allowance has dropped significantly on the new FAFSA. Anyone
know if the colleges make up for lost federal aid because of this change? Any strategies to close the gap? I read about contributing to Roth IRA’s, paying off debt and buying a car to reduce assets, but what about savers who put funds away for college? Also, this likely hurts parents with two children going to college. Seems like this what not planned out well. Any thoughts appreciated.
The asset protection allowance has been getting lower and lower for years now. This isn’t new.
I can’t quote @blossom exactly…but the advice blossom gives is excellent. Don’t do financial gymnastics simply for financial aid gain…that you might not plan to be doing anyway.
Remember, the very vast majority of colleges do not meet full need anyway. Your financial gymnastics might not net you a penny more need based aid.
The reduced asset protection allowance means that the federal methodology is expecting you to to be able to use more of your assets to help pay for college. The colleges are not providing aid to make up the difference.
Be careful about moving money that could have tax implications. Check with your financial advisor, if you have one.