Impact of Having High Assets on Financial Aid if You're Low-Income

I fall under the low-income bracket but, lucky for me, I have a good amount of assets. Can someone help me understand how this situation could affect my financial aid eligibility?

When calculating federal financial aid, the Free Application for Federal Student Aid (FAFSA) takes into account a family's income, benefits, and certain assets to generate a Student Aid Index (SAI). This SAI is then used to determine your financial need.

For most students, the value of their family's assets plays a smaller role in determining SAI. However, assets can have a proportionately larger influence if they are substantial. The FAFSA excludes certain assets from this calculation—such as the value of your family's primary residence, the value of your family's small business (if it employs less than 100 people), and retirement accounts—but it does include bank and investment account balances (stocks, bonds, mutual funds, etc.)

Now, it's important to keep in mind that each family gets an "asset protection allowance"—a certain amount of assets that won't count against you in the financial aid formulas. The exact figure depends on the age of the older parent; typically, the older the parent, the higher the allowance. But if your "investment net worth" is higher than your asset protection allowance, a percentage of the difference will be included in your Student Aid Index (SAI), reducing the financial aid you may be eligible for.

Another aspect to consider is that different colleges may use different methods to analyze your financial situation. For example, some private institutions use the CSS/Financial Aid PROFILE, which often considers home equity and other factors, potentially leading to a higher SAI.

So, in short, while a low income generally increases your financial aid eligibility, a substantial amount in assets might offset some of that aid. Every case is unique, and it could be beneficial to consult with a financial aid advisor or use the net price calculator of the colleges you're considering for a clearer picture of your specific situation.