Assets Can Impact Your SAI Calculation

Assets are a pivotal factor in SAI calculation. The SAI calculation, a process significantly influenced by the FAFSA Simplification Act, treats the two parties differently based on the asset ownership, whether it’s the student or the parent. The change in the weighing of assets, a significant outcome of the FAFSA Simplification Act, is worth noting. Despite the smaller value on the FAFSA form, students’ assets carry more weight than parents’ (contributors’) assets, which are of significantly higher value.

For students and their contributors, net worth reporting is necessary for the assets section. Net worth is the total value of assets minus all liabilities, and it is a key factor in the SAI calculation. The federal methodology formula treats students and their contributors differently to determine a family’s asset contribution. Student assets have an assessed value of 20%, while parents have an estimated value of 5.64%. It’s important to note that reported asset values are the same as when the student files an FAFSA. Therefore, after submitting the FAFSA, the formula will not capture any changes to net worth for a student or contributor.

Common assets a student may own include savings and checking accounts at their financial institution. As a student compiles liquid holdings in those accounts, a portion of those assets (20%) will proportionally increase a student’s SAI. So, if a student has $1,000 in a savings account, their SAI will increase by $200.

Parent assets are much larger in nature and spread across different investment vehicles. Assets for contributors include liquid bank accounts, 529 college savings plans, investments in equities or bonds, rental and investment properties, and family businesses and farms. Family businesses and farms are now a reportable asset for contributors. Federal methodology calculates the assessed value of these assets by using an adjustment table.

Several assets do not factor into the SAI calculation and do not need to be reported on the FAFSA form. These assets, including primary residences, retirement accounts, life insurance, and personal items, are exempt. When completing the assets section of the FAFSA, it’s crucial for students and their contributors to read each asset question carefully and to input the asset information into the form accurately. Any inaccuracies in asset values can have a significant impact on a student’s SAI calculation.