Yes — the FAFSA asks about investments. But the definition of "investments" on the FAFSA is specific, and plenty of things families assume are counted aren't. Retirement accounts, the equity in your home, and small business ownership are all excluded. Brokerage accounts, 529 plans, and taxable savings are included.
Getting this wrong in either direction costs you. Overreporting assets that shouldn't be listed raises your Student Aid Index unnecessarily. Underreporting assets that should be listed creates verification risk and — if deliberate — constitutes financial aid fraud.
Here's the complete breakdown of every asset type and exactly how the FAFSA treats it.
How the FAFSA uses investment information
The FAFSA collects asset data to calculate your Student Aid Index (SAI) — the number schools use to measure your family's financial strength. Parent assets are assessed at a maximum rate of 5.64%, meaning $100,000 in reportable parent assets raises your SAI by at most $5,640. Student assets are assessed at 20%, which is why keeping savings in a parent's name rather than a student's typically reduces the SAI significantly.
Not all assets are counted equally — and some aren't counted at all. The sections below cover every major asset category.
Investments that ARE reported on the FAFSA
Brokerage accounts and taxable investment accounts
All taxable investment accounts must be reported, regardless of what they hold. This includes:
- Individual stocks and stock portfolios
- Bonds and bond funds
- Mutual funds held in taxable accounts
- ETFs held in taxable accounts
- Money market accounts (held outside of a bank)
- REITs and other investment vehicles in taxable accounts
Report the current market value as of the date you file the FAFSA, not the cost basis or purchase price. If the market value has dropped below what you paid, you report the current lower value.
529 college savings plans
529 plans are reported as parent assets when the account owner is a parent. They are assessed at the parent rate of up to 5.64% — not the student rate.
Important nuances:
- If the 529 is owned by a grandparent, it was previously excluded from the FAFSA entirely — but starting with the 2024-25 FAFSA Simplification Act, grandparent-owned 529 distributions no longer count as student income. Grandparent-owned 529 plans are still not reported as assets on the FAFSA.
- If the 529 is owned by the student, it is reported as a student asset and assessed at 20%.
- Multiple 529 accounts for the same beneficiary are combined and reported together.
Savings accounts and bank deposits
All savings and checking account balances must be reported — including:
- Standard savings accounts
- High-yield savings accounts
- Certificates of deposit (CDs)
- Money market deposit accounts (held at a bank)
Report the balance as of the date you file. Ordinary checking account balances used for everyday expenses are also technically reportable, though the FAFSA instructions note that the balance should reflect "what's available" — not funds already earmarked for bills.
Cryptocurrency
Cryptocurrency is treated as an investment asset on the FAFSA and must be reported. Bitcoin, Ethereum, and other digital assets held in taxable accounts are reportable at their fair market value as of the date you file. Cryptocurrency held in a retirement account (like a self-directed IRA) follows the retirement account rules and is excluded.
UGMA/UTMA custodial accounts
Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts are owned by the student — meaning they are reported as student assets and assessed at the higher 20% rate. If a UGMA/UTMA account has a significant balance, this can materially increase the SAI. Families who anticipate this sometimes spend down these accounts on legitimate education-related expenses before filing, but consult a financial advisor before doing so.
Real estate (non-primary residence)
Investment properties, vacation homes, and rental properties must be reported. Report the net value — market value minus the outstanding mortgage balance. A rental property worth $400,000 with a $300,000 mortgage is reported as $100,000 in assets.
Business equity (businesses with 100 or more full-time employees)
If you own equity in a business with 100 or more full-time equivalent employees, that equity must be reported as a parent asset. The value to report is your proportional share of the business's net worth.
Investments that are NOT reported on the FAFSA
Retirement accounts — the most important exclusion
All retirement accounts are completely excluded from FAFSA asset reporting. This includes:
- 401(k) and 403(b) plans
- Traditional and Roth IRAs
- SEP-IRA and SIMPLE IRA accounts
- Pension funds and annuities
- Defined benefit plan values
- Self-directed IRAs (including those holding real estate or crypto)
Not only are retirement balances excluded from assets — pre-tax contributions to retirement accounts also reduce your adjusted gross income, which in turn reduces your SAI. This is why maximizing retirement contributions before filing is one of the highest-leverage financial moves available to families. See our financial aid tips for high-income families for the full strategy.
Primary home equity
The equity in your primary residence — your home's market value minus your outstanding mortgage — is not reported on the FAFSA. This is a significant exclusion for families who have built substantial home equity.
Note: The CSS Profile used by many private colleges does ask about home equity, and some schools factor it into their institutional aid calculation. If you're applying to CSS Profile schools, home equity may affect your institutional aid package even though it doesn't appear on the FAFSA.
Small business ownership (under 100 full-time employees)
If you own a small business with fewer than 100 full-time equivalent employees that you or your family controls, the net value of that business is not reported on the FAFSA. This exclusion covers the majority of family-owned businesses.
Life insurance cash value
The cash value of whole life, universal life, and other permanent life insurance policies is not reported on the FAFSA. Term life insurance has no cash value and is not relevant.
Prepaid tuition plans
Prepaid tuition plans — which lock in future tuition at current rates — are treated differently from 529 savings plans. When owned by a parent, they are reported at a maximum of the refund value or the plan's account value, whichever is less. In practice they often have a minimal impact on the SAI.
The rate difference: parent assets vs. student assets
This is one of the most consequential and least understood aspects of the FAFSA formula.
Parent assets are assessed at a maximum of 5.64% of net asset value. Student assets are assessed at 20%. The same $50,000 in savings raises the SAI by $2,820 if held by a parent — and by $10,000 if held by the student.
The practical implication: if you have savings intended for college, holding them in a parent's name rather than the student's name will almost always result in a lower SAI. This applies to 529 plans (parent-owned vs. student-owned), UGMA/UTMA accounts being spent down before filing, and any other savings the family has flexibility to position.
Does the FAFSA verify your investment information?
Yes — through the federal verification process. About one-third of all FAFSA applications are selected for verification each year. If selected, your school will typically request tax transcripts, W-2s, and may ask for bank or investment account statements to confirm the figures you reported.
The IRS Direct Data Exchange (DDX) automatically imports income data but does not pull asset balances. Asset information is self-reported and verified only if you're selected for the verification process.
Intentionally underreporting assets constitutes financial aid fraud — punishable by up to five years in prison and fines of up to $20,000 under the Higher Education Act. See our guide to what happens if you lie on the FAFSA for the full consequences.
