Financial Aid

What is the Effect of Retirement Savings on Financial Aid?

Retirement savings are not reported on the FAFSA, but they are reported on the CSS Profile, meaning they could potentially affect your financial aid award at certain schools.
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Applying for financial aid can be confusing, especially when you're going through the process for the first time. It can be difficult to figure out what you should report on the applications and what to leave out. And it can also be hard to understand how your financial situation affects the financial aid you receive. One question we hear a lot here at MEFA is "Will my retirement savings affect my financial aid?" And the answer is…it depends.

There are two main applications that schools use to assess students' financial aid eligibility (also called "financial need"), the Free Application for Federal Student Aid (FAFSA®) and the CSS ProfileTM. Every school requires you to compete the FAFSA in order to receive financial aid. Some schools then require the CSS Profile in addition to the FAFSA.

If your college only requires you to complete the FAFSA, than your retirement savings will not affect your financial aid at all. Retirement savings are not reported on the FAFSA. This includes any recognized retirement plans such as 401(k) plans, pension funds, and annuities. Note that this does not include non-traditional ways you might chose to save for retirement, such as in a savings account, so if your retirement funds are not in a traditional plan, you will have to report them in the asset section of the FAFSA. But any funds in a traditional retirement savings plan will not be reported on the FAFSA. So whether you have $5 or $5,000,000 in a 401(k), it will not affect the amount of financial aid you receive.

But what if your school also requires you to complete the CSS Profile? This is where retirement funds can start to affect financial aid. Since schools use the CSS Profile to award their own grants and scholarships (also called "institutional funds"), they can ask much more detailed questions about a family's finances, including questions about retirement savings. The CSS Profile will ask you to list the value of all your retirement accounts. What the school then chooses to do with that information is up to them. Most colleges and universities only glance at this information, and don't include the value of your retirement accounts in the calculation to determine your financial aid eligibility. However, if a school did want to include these numbers when calculating your aid, it would certainly be within their right. The best way to figure out what a school will choose to do with that information is to talk directly to the school's financial aid office.

If you have additional questions about financial aid or anything else related to college, our college planning experts are happy to assist. Give us a call at (800) 449-6332 or email us at

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