Your parents’ investments are among the many factors influencing how much financial aid you’ll get after you fill out the Free Application for Federal Student Aid (FAFSA). The investments your parents make are either counted as your parents’ assets or income, so if your family has many investments, you may qualify for less aid.

However, not all assets and income are reportable for FAFSA purposes, meaning you might be eligible for more aid than you expect. In this guide, we’ll reveal the rules FAFSA has for parents’ investments, including which investments to report when completing the application and how they can impact your federal aid eligibility.

What’s the Net Worth of Parents’ Investments on FAFSA?

The net worth of your parents’ investments at the time you’re filling out the FAFSA is the amount of money left after you subtract any debt your parents may owe from the total value of each investment. Here’s the formula:

Value of property − debt owed on property = net worth

For example, if your parents have an investment property valued at $100,000 but owe $75,000 in debt on that property, the investment’s net worth is $25,000.

To break this down further, let’s say your parents own two investment properties, and the first one is valued at $100,000, but your parents have a debt of $110,000. If we deduct the debt owed from the property value, we’d get a negative value of $10,000. In this case, the net worth is counted as $0, not the negative value.

If the second property your parents own is valued at $200,000 and they owe $100,000, the net worth of the investment is $100,000. This means that you need to report $100,000 for both investments since the first one’s net worth is $0.

Parents’ Investments on FAFSA—What To Include and What To Exclude

Certain types of investments don’t have to be reported on the FAFSA due to income protection allowance, which is the funds reserved for covering living costs and other necessary expenses. Here’s a list of your parents’ investments that you have to include on the FAFSA, as well as the ones you should exclude:

Investments To Include	Investments To Exclude
Real estate and rental property Trust funds Money market funds and mutual funds Certificates of deposit (CDs) Stocks, bonds, and other securities Installment and land sale contracts, including mortgages Commodities Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) Qualified educational benefits or college savings accounts like Coverdell ESAs and 529 plans	The home in which your parents live Cash Savings and checking accounts  ABLE accounts The value of life insurance and retirement plans like 401(k), pension funds, annuities, and non-education IRAs UGMA and UTMA accounts for which you’re the custodian, not the owner

Common Investments and Their Impact on Financial Aid

Most of your parents’ investments are reported as assets on the FAFSA and impact the amount of financial aid you may get. When your aid eligibility is calculated, the financial aid office at the college you plan to attend considers your Student Aid Intex (SAI)—an index number representing your family’s financial strength. The SAI is calculated using information like:

• Family size
• Your/your parents’ assets
• Parental and student income
• Your family’s federal benefits

However, not all of your parents’ investments have the same impact on your financial aid, and some even have none. Here’s how the following common investments may affect your aid eligibility:

1. Retirement accounts
2. UGMA/UTMA accounts
3. 529 plans

Retirement Accounts

When determining your SAI, one of the factors not taken into account is the value of your parents’ retirement accounts, such as:

• 401(k)
• Roth IRA
• Traditional IRA

While the withdrawals from a Roth IRA are tax- and penalty-free if used for college-related expenses, the money you withdraw counts as untaxed income on the FAFSA. This may increase your SAI, meaning you’ll be eligible for less financial aid.

UGMA/UTMA Accounts

Custodial accounts like the UGMA and UTMA accounts are considered your assets on the FAFSA instead of your parents’, and you must include them when filling out the application. The same goes for any interest, capital gains, or dividends you earn. This is because 20% of your assets and 50% of your income are counted on the FAFSA if you’re a dependent student.

529 Plans

The money collected in 529 plans that either you or your parents own counts as parental assets on the FAFSA. A certain amount of money held in a 529 savings account (typically around $10,000) falls under the asset protection allowance, and it doesn’t affect your financial aid. However, any money beyond that amount may reduce your aid amount by 5.64% of the asset’s value when your SAI is calculated.

Do Parents’ Credit Scores Affect Financial Aid?

In addition to your family’s investments influencing your financial aid amount, your and your parents’ credit scores can impact your chances of obtaining certain types of financial aid. While a credit profile typically isn’t assessed when checking your eligibility for federal aid, it plays a major role in determining whether you qualify for federal Direct PLUS loans and private loans:

Type of Loan	Explanation
Direct PLUS loans (including Parent PLUS and Grad PLUS loans)	Both loans require a credit check to assess your eligibility, so if your or your parent’s credit score doesn’t meet the lender’s standards, you may not be approved for the loan
Private student loans	Private student loans can be a good option to cover the remaining expenses if federal aid and scholarships aren’t enough. Private lenders typically require a credit check, and they sometimes also consider your cosigner’s credit score

Building and maintaining good credit can help you secure additional college funding options if you don’t get approved for need-based federal financial aid. Plus, a strong credit score can help you get better terms and interest rates when you apply for loans, be it college loans or financing for other large expenses like a house or a vehicle. 

A great way to start building credit early is to rely on a service like FreeKick. This platform helps you build a strong credit profile with the help of your parents, starting as early as the age of 13.

FreeKick—Premium Credit Building and ID Protection

FreeKick is an FDIC-insured deposit account provided by Austin Capital Bank that enables minors and young adults aged 13 to 25 to build credit with their parent’s assistance. The platform also helps you protect yourself from identity theft with its identity monitoring and protection services. The ID theft features are designed to cover a family of up to two adult parents and six children.

Start Building Credit Early With FreeKick

Starting your credit building journey early can help you potentially save over $200,000 throughout your lifetime since good credit improves your chances of securing loans with beneficial terms.

However, the CARD Act of 2009 prohibits young adults and minors under 21 from obtaining a credit card, making it difficult to establish a good credit score while you’re in high school or college.

With FreeKick’s credit building services, you can establish a strong credit profile as early as the age of 13 through parent-sponsored credit building. Here’s how to get started: 

1. Create an Account—With your parents’ help, go to FreeKick.bank and choose a plan that best fits your family’s needs and budget
2. Set It and Forget It—Once they activate the account, FreeKick automatically starts building your credit over the next 12 months
3. Keep Growing—When the initial 12-month period ends, your parents can either renew the account and keep building credit or close it and get a refund of your initial deposit

Keep Your Identity Protected With FreeKick

If you don’t protect your information, you risk losing your chance of getting financial aid. Identity criminals can steal your personal data and use it to apply for financial aid instead of you, making your application invalid.

Children and students are particularly vulnerable to ID theft—in fact, data shows that a child’s identity is stolen every 30 seconds. What’s more, college students are among the groups most frequently targeted by identity criminals.

To help ensure your financial aid eligibility isn’t negatively affected by ID theft attempts, FreeKick offers comprehensive identity monitoring and protection features for both adults and minors:

Services for Adult Children and Parents	Services for Minor Children
Credit profile monitoring SSN monitoring Dark web monitoring for personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Lost wallet protection Court records monitoring Change of address monitoring Non-credit (Payday) loan monitoring Free FICO® Score monthly FICO® Score factors Experian credit report monthly	Credit profile monitoring SSN monitoring Dark web monitoring for children’s personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Sex offender monitoring—based on sponsor parent’s address

FreeKick Pricing

Regardless of your family’s budget, FreeKick has a plan that meets your requirements. Both available plans are FDIC-insured up to $250,000. Find more details in the table below:

FDIC-Insured Deposit Amount	Plan Fee
$3,000	$0 (Free)
No deposit	$149/year

Establish a strong credit score early and protect yourself from identity theft—sign up for FreeKick today.