By Mila Tappan, College Access and Outreach Manager, Finance Authority of Maine (FAME)

June 26, 2018

  1. A family’s primary residence and retirement accounts are excluded from consideration. The following assets are completely excluded when determining federal financial aid eligibility: the family’s primary residence, retirement accounts, and family-owned and controlled small businesses.
  1. For most families earning under $50,000, all assets are excluded. When determining federal financial aid eligibility for dependent students, the calculation excludes both parent and student assets when the parents combined AGI (or income earned from work for non-filers) is less than $50,000 and:
  • Any household member received a federally means tested benefit during 2016 or 2017 (SSI, SNAP, Free or Reduced Lunch, TANF or WIC); or
  • Parents are not required to file an IRS Form 1040; or 06.26.18 CSPN Blog Next Gen_KH_park_2_116 copy
  • Either parent is a Dislocated Worker
  1. There is an Education Savings and Asset Protection Allowance. Even when savings are included, the federal financial aid formula has a built-in Education Savings and Asset Protection Allowance. This allowance protects a portion of assets for those over the age of 25. For example, for a married couple where the older parent is 46 years old, the Education Savings and Asset Protection Allowance is $20,300. As a result, only assets that exceed that amount of the asset protection allowance will factor into your federal financial aid eligibility.
  1. No more than 5.64% of remaining assets are considered available. Of the assets that remain after the Education Savings and Asset Protection Allowance, no more than 5.64% of parent assets are considered available for education. Often the percentage of assets that are considered available can be less than 5.64%.
  1. Section 529 accounts owned by either the parent or a dependent student for the benefit of the student are considered a parent asset. When parent information is required to determine eligibility for federal financial aid, 529 assets are treated as a parent asset if the student is dependent, and the account is owned by a parent or the student. This treatment can be beneficial because no more than 5.64% of parent assets can impact federal aid eligibility, whereas the rate for student assets may be as high as 20%.

Note: Information on federal financial aid is based on current interpretation of federal financial aid rules, which are subject to change. The rules in effect at a later date may be different. Distributions from section 529 accounts owned by a party other than the parents or student will be treated as untaxed student income. For more complete information, please go to the U.S. Department of Education’s website at

Additional details on the federal financial aid formula can be found in the 2018-2019 EFC Formula Guide.


About the Author

Mila Tappan is the College Access and Outreach Manager of the Finance Authority of Maine (FAME). Her areas of expertise include FAFSA completion, the financial aid process, and preparing to pay for college. FAME is a quasi-independent state agency that expands business and educational opportunities to help Maine people and businesses succeed. FAME is the administrator of NextGen 529 and the Harold Alfond College Challenge, and offers a suite of programs and services to help Mainers meet their educational goals no matter where they are in life. To learn more about FAME, please visit To learn more about NextGen visit