FAFSA Income and Asset Reporting 2

Question 1

How does the FAFSA treat assets held in a grandparent-owned 529 plan?

Accepted Answer

Not reported at all under new rules

Answer

Under FAFSA Simplification Act changes effective 2024-25, grandparent-owned 529 distributions and accounts are no longer reported on the FAFSA.

Question 2

Rental property owned by parents is reported on FAFSA as:

Accepted Answer

A parent asset (net value)

Answer

Rental properties are reported as parent assets on the FAFSA at their net value (market value minus any debt owed).

Question 3

What is the FAFSA income protection allowance (IPA)?

Accepted Answer

An amount of income excluded from the SAI calculation to cover basic living expenses

Answer

The Income Protection Allowance (IPA) is an amount of income that is shielded from the SAI calculation to account for basic living and family expenses.

Question 4

How are tips and unreported cash income treated on the FAFSA?

Accepted Answer

They must be reported as income even if not on a tax return

Answer

All income including cash tips and other unreported earnings should be accurately reported on the FAFSA, even if not reflected on a tax return.

Question 5

What is included in the definition of 'assets' for FAFSA purposes?

Accepted Answer

Cash, savings, investments, and real estate (excluding primary home)

Answer

FAFSA assets include cash, savings accounts, checking accounts, investments, and real estate other than the primary home.

FAFSA Practice Test

FAFSA Practice Test

FAFSA Income and Asset Reporting 2