Federal programs such as Pell Grants provide financial aid for college according to need. Although the federal government is the principal source of need-based student aid, almost all states offer assistance. Rules governing student aid designate income as the primary indicator of ability to pay but assets are also considered. This policy brief documents the impact of assets on need-based aid for dependent students under current rules and formulas. The main observation is that savings and assets do not affect need-based aid for most dependent students. When assets count toward the EFC, savings held in 529 plan accounts have less impact on need-based aid than savings held in basic savings accounts.
Project: College Success
Clancy, M. M., & Beverly, S. G. (2017, February). Do savings and assets reduce need-based aid for dependent students? (CSD Policy Brief No. 17-10). St. Louis, MO: Washington University, Center for Social Development. https://doi.org/10.7936/K7KW5FJX