How assets are treated
What counts, the conversion rates, and what the FAFSA ignores.
The FAFSA counts reportable assets - cash, savings, investments, and the net worth of businesses and farms - but not your primary home, retirement accounts, or personal possessions. A percentage of that net worth, the asset conversion rate, is added to the contribution: for 2026-27 that is 12% for parents, 20% for a dependent student, and 7% for an independent student with dependents. The old age-based asset protection allowance is now $0.
Source: U.S. Dept. of Education, 2026-27 SAI and Pell Grant Eligibility Guide. Data as of June 2026.
Asset conversion rates (2026-27)
| Whose assets | Conversion rate |
|---|---|
| Parents (dependent student) | 12% |
| Dependent student | 20% |
| Independent, no dependents | 20% |
| Independent with dependents | 7% |
Source: U.S. Dept. of Education, 2026-27 SAI and Pell Grant Eligibility Guide. Data as of June 2026.
A dependent student's assets are assessed at a higher rate than parents', which is why moving savings into a parent's name (where allowed and honest) can lower the index.
Reportable vs excluded
- Reportable: bank balances, brokerage and investment accounts, 529 plans (parent-owned for a dependent student), investment real estate, and business/farm net worth.
- Excluded: the family's primary residence, retirement accounts (401(k), IRA, pensions), the cash value of life insurance, and personal property like cars.
Businesses and farms
Business and farm net worth is reported and adjusted on a graduated schedule before the conversion rate applies, so only a portion of larger business values counts. See the full reference tables for the business/farm adjustment schedule.
Frequently asked questions
Which assets count on the FAFSA?
Cash, savings and checking balances, investments (stocks, bonds, mutual funds, real estate other than your home), and the net worth of businesses and farms. The family's primary home, retirement accounts, and personal possessions are not reported.
What is the asset conversion rate?
It is the percentage of reportable net worth that counts toward the contribution. For 2026-27 it is 12% for parents, 20% for a dependent student, and 7% for an independent student with dependents.
Did the asset protection allowance go away?
Effectively yes. For 2026-27 the asset protection allowance is $0 at every age, so there is no longer an age-based shelter on parent assets - though the home and retirement accounts remain excluded.
Sources
U.S. Dept. of Education, 2026-27 SAI and Pell Grant Eligibility Guide. Data as of June 2026 for 2026-27. General information, not financial-aid advice. Verify at studentaid.gov.
Last updated: 2026-06-22