How Much Savings is Too Much for FAFSA?

A common question I receive at Financial Aid Coach is how much is too much savings when it comes to qualifying for need-based college financial aid. Specifically, how much savings can I report on the FAFSA or CSS Profile before my family no longer qualifies for financial aid? Let’s dive into how savings and investments impact financial aid eligibility.

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How Your Savings Impact FAFSA and Financial Aid Awards

First, let’s dive into the details of how the FAFSA calculates the impact of savings.

How FAFSA Calculates the Impact of Savings

When you file the FAFSA, your family’s savings and investments are factored into the formula that determines your Student Aid Index (SAI), which replaces the old Expected Family Contribution (EFC). The FAFSA assesses parent assets—such as savings accounts, brokerage accounts, and non-retirement investments—at a rate of up to 5.64% of their total value.

That means every $10,000 in parent assets can reduce need-based aid eligibility by roughly $564.

Student assets, on the other hand, are assessed more heavily—up to 20% of their value.

Can You Have Too Much Money Saved?

Technically, there’s no specific savings limit that automatically disqualifies a family from receiving financial aid—but having substantial savings can reduce your eligibility. The FAFSA formula looks at your available assets and assumes a small portion can be used toward college costs each year. For parents, up to 5.64% of non-retirement savings and investments are counted in the Student Aid Index (SAI), while student-owned assets can be assessed at up to 20%. That means large balances in checking, savings, or investment accounts can slightly increase your SAI and lower need-based aid. However, because income plays a much larger role than assets, most families don’t lose significant aid solely because of savings. Strategic planning—like keeping funds in parent accounts and maximizing tax-advantaged savings vehicles—can help preserve aid eligibility while maintaining financial security.

Let’s dive into a few strategies to maximize your eligibility for need-based financial aid.

Smart Strategies for Reporting Savings on the FAFSA

Prioritize spending from student assets first.
Because student assets are assessed at up to 20% (versus 5.64% for parent assets), it’s often best to use funds in the student’s name for upcoming expenses before filing the FAFSA.

Keep savings in the parent’s name whenever possible.
Parent-owned accounts are treated more favorably in the formula. Shifting savings from a custodial (UGMA/UTMA) account into a parent’s account before filing can help lower the asset impact.

Pay upcoming expenses early.
If you have bills due soon (tuition deposits, property taxes, or credit card balances), consider paying them before submitting the FAFSA. This legally reduces your reportable cash on hand.

Don’t count non-reportable assets.
Retirement accounts (401(k), IRA, Roth IRA), home equity, and small family businesses are excluded from FAFSA asset calculations—so make sure you don’t accidentally report them.

Revisit your filing timing each year.
FAFSA opens in the fall for the following academic year. Planning when to file—after certain expenses or contributions—can subtly improve your financial profile.

Have more questions? Schedule a 1-to-1 session here >>

When it comes to financial aid, savings and investments are just one piece of the larger puzzle. While your asset balances can influence your Student Aid Index, smart planning and accurate reporting can make a meaningful difference in your eligibility for need-based aid. Remember, income typically carries far more weight than savings in the FAFSA formula, so families shouldn’t feel penalized for being financially responsible. The key is understanding how assets are assessed and positioning them strategically before you file. If you’d like personalized guidance on how your family’s savings and income might affect financial aid, schedule a 1-to-1 session to review your situation and explore ways to maximize your eligibility.