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Articles / Paying for College / Assets, Equity, & Financial Aid

Dec. 19, 2003

Assets, Equity, & Financial Aid

Question: When you are applying for financial aid from an institution such as Yale what assets are looked at in the process in addition to income? Does a parent's 401k retirement plan and the asset value of a home fiqure in the ability-to-pay equation?

Colleges approach financial aid with different "methodologies," and you should feel free to ask officials at each school on your list to explain their process. Many institutions, like Yale, that require the CSS PROFILE will consider home equity when making aid decisions. However, most will put a "cap" on the amount of equity that figures into an aid calculation. That cap is typically the household income multiplied by three.


Colleges will also review all assets listed on your finaid forms, but--says one of our financial aid advisors--"assets typically affect the bottom line far less than most people believe." In other words, it's income that will make the greatest difference in the size of an aid package. If a family has large assets, they are generally reviewed in conjunction with other family financial information. For instance, if a student has older parents who are at or near retirement age and don't have a pension or retirement fund, then their assets will weigh less heavily on an aid decision than they might under different circumstances (e.g., younger mom and dad with a whopping 401k).

Speaking of 401k plans, our expert also said that the accumulated assets in your 401k won't be considered when aid decisions are calculated; however, once your child is in college, then the amount of income you defer each year will be counted as untaxed income, which will definitely affect aid awards.

Keep in mind that any extenuating circumstances that don't fit on those nasty little lines on the financial aid forms can be explained in a cover letter to financial aid officers. You can also make a phone or in-person appointment with the finaid folks at the colleges on your list if you have questions about how your aid application will be reviewed or even about how to report certain situations. Once an aid package has been determined, there is often wiggle room, if you feel that it doesn't meet your needs. When appealing aid packages, remember that--as with most things in life--you catch more flies with honey. Act appreciative, not entitled!

Written by

Sally Rubenstone

Sally Rubenstone

Sally Rubenstone knows the competitive and often convoluted college admission process inside out: From the first time the topic of college comes up at the dinner table until the last duffel bag is unloaded on a dorm room floor. She is the co-author of Panicked Parents' Guide to College Admissions; The Transfer Student's Guide to Changing Colleges and The International Student's Guide to Going to College in America. Sally has appeared on NBC's Today program and has been quoted in countless publications, including The New York Times, The Washington Post, USA Weekend, USA Today, U.S. News & World Report, Newsweek, People and Seventeen. Sally has viewed the admissions world from many angles: As a Smith College admission counselor for 15 years, an independent college counselor serving students from a wide range of backgrounds and the author of College Confidential's "Ask the Dean" column. She also taught language arts, social studies, study skills and test preparation in 10 schools, including American international schools in London, Paris, Geneva, Athens and Tel Aviv. As senior advisor to College Confidential since 2002, Sally has helped hundreds of students and parents navigate the college admissions maze. In 2008, she co-founded College Karma, a private college consulting firm, with her College Confidential colleague Dave Berry, and she continues to serve as a College Confidential advisor. Sally and her husband, Chris Petrides, became first-time parents in 1997 at the ripe-old age of 45. So Sally was nearly an official senior citizen when her son Jack began the college selection process, and when she was finally able to practice what she had preached for more than three decades.

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