How Do Retirement Savings Impact My CSS Profile?

There are a lot of factors that influence FAFSA. Here, we answer top questions about the FAFSA application.

Updated September 1, 2022

How Do Retirement Savings Impact My CSS Profile? is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

Are you ready to find your fit?

This page addresses frequently asked questions about the FAFSA, and how savings and FAFSA processing and reporting interact. To complete the FAFSA, applicants need documentation, including records on the prior tax year, untaxed income, and assets. The FAFSA requires reporting some assets but not others. Recognized retirement plan savings do not affect financial aid unless schools use both FAFSA and CSS Profiles when calculating aid.

Schools using the FAFSA alone do not require reporting retirement savings in recognized retirement plans. Recognized plans include annuities, pension funds, and 401K plans. Non-education IRAs and Keogh plans also count as non-reportable assets on the FAFSA.

Schools that require a CSS Profile ask applicants to report retirement account amounts. Most schools do not factor these figures into financial aid, but some may. Ask your school's financial aid office whether retirement savings will influence aid packages.

Continue reading for answers to common savings and FAFSA questions.

Will My Savings Account Affect My Financial Aid?

As reportable assets, traditional savings or brokerage accounts can increase expected family contribution (EFC) and reduce financial aid eligibility. The FAFSA does not consider retirement accounts reportable assets, so funds do not affect federal financial aid packages. But last year's retirement contributions get added back to the total income and impact EFC.

CSS Profiles do consider college savings accounts, home equity, and retirement accounts. The latter two assets do not affect savings and FAFSA, though.

How Long Does the FAFSA Take to Process?

Online FAFSAs are usually processed in 3-5 days, whereas paper applications require 7-10 days. Applicants can log into to review and correct their FAFSA online. Applicants also go online to check on their application status. The portal will indicate if the application needs signatures or further action.

How Are Assets Treated on the FAFSA?

Certain assets affect FAFSA data, so take time to understand asset savings and FAFSA reporting. Equipment, vehicles, and nonexpendable commodities worth at least $1,000 count as reportable assets. This includes bank accounts and investment properties. However, assets such as retirement accounts, small businesses, or home equity do not require reporting.

Student assets increase EFC by 20% of assets' net worth. Dependent students must report their parents' or guardians' assets, which increases the EFC by up to 5.64%. Some students move reportable assets into another family member's name to lower or eliminate EFC increase from the assets.

How Will Having an Open Line of Credit Affect My FAFSA?

Open credit lines do not necessarily affect FAFSAs. The government offers most federal loans to eligible students regardless of credit history. Completing the FAFSA does not involve a credit check or affect the applicant's credit score.

Parent PLUS loans and private loans do require a credit check. Private lenders use hard credit checks since loan approval and terms depend on credit history. These credit checks may temporarily lower applicants' credit scores.

Should I Submit FAFSA Even If I'm Not Applying for Financial Aid?

Each year, over $2 billion in student aid grants go unused. Some learners assume they do not qualify for financial aid due to high personal or family income. However, most college enrollees qualify for at least some financial aid. Prospective learners can fill out the FAFSA regardless of income. Some schools will not offer academic or need-based scholarships to applicants who do not submit FAFSAs.

What Is the FAFSA and How Does It Work?

The FAFSA helps the government and prospective schools determine college students' eligibility for and access to financial aid. The form calculates EFC by gathering financial data from students and parents or guardians of dependent students.

Once accepted to a school, applicants receive a financial aid offer based on the FAFSA. Aid can total over $10,000 for applicants qualifying for the full Pell Grant and Federal Supplemental Educational Opportunity Grant (FSEOG) amounts. Eligible undergraduate applicants may borrow $5,500-$12,500 in subsidized and unsubsidized federal loans. Parents may take out Parent Plus Loans to help pay their children's college bills.

How Much Money Can I Get from FAFSA?

Eligible FAFSA applicants may qualify for up to $6,345 annually in Federal Pell Grant money. Some learners qualify for the FSEOG up to $4,000 annually, though it awards $599 on average.

Undergraduates may borrow $5,500-$12,500 in federal loans annually. Total amounts are capped at $23,000 in direct subsidized loans and $57,500 in direct unsubsidized loans. Graduate students may borrow up to $20,500 annually for a total of up to $138,500. Schools may use FAFSA information to offer more scholarships, work-study, and loans.

What Happens After I Submit the FAFSA?

Applicants with questions about the FAFSA monitor their financial aid processing by logging in to Users review and correct their FAFSA through the online portal. The portal answers FAFSA questions, including if a FAFSA went through processing or needs further action.

The government usually processes online FAFSA applications in 3-5 days. Paper applications can take 7-10 days. Applicants then receive a student aid report, which schools use to put together financial aid offers.

How Is Work-Study Income Treated for Tax Purposes and on the FAFSA?

Undergraduate and graduate students with financial need may qualify for work-study offers based on their FAFSA results. Work-study programs may overlap with students' interest areas or serve various community needs. The government pays 50% of work-study salaries. Income may go directly toward tuition or to the student, and the money does not require repayment.

Earners pay federal and state taxes on work-study income. The government waives some taxes for work-study students taking at least six credits and/or working on-campus jobs. Work-study income does not reduce FAFSA financial aid awards.

Keep up with the latest

Never miss a detail on the news, trends, and policies that could directly impact your educational path. is an advertising-supported site. Featured or trusted partner programs and all school search, finder, or match results are for schools that compensate us. This compensation does not influence our school rankings, resource guides, or other editorially-independent information published on this site.

Do this for you

Explore your possibilities- find schools with programs you’re interested in and clear a path for your future.