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Asset Protection Allowance – The Financial Aid Saving Grace

Most people know that their assets (savings, checking, stocks, bonds, mutual funds, etc.) all contribute to the expected family contribution when they complete the FAFSA form. However, most don’t know what the Education Savings and Asset Protection Allowance is, nor how it helps them. We typically refer to this table as the Asset Protection Allowance or the APA.

This table is available only the the parents of the students. It is the amount of cash and other assets that a parent can accumulate before those assets are assessed towards their expected family contribution. For FAFSA purposes, those assessed assets do not include home equity, retirement accounts, annuities, small businesses, family farms, or cash value in life insurance. Those assets are exempt from the calculation in their entirety.

Here are two examples of how the APA helps…

Family #1: 2 parents oldest parent is 45 $30,000 in cash and investments.

The family’s APA is $48,700 (see the table below). $30,000 is less than their APA, therefore none of their cash and investments will counted towards their expected family contribution.

Family #2: 1 parent age 42 $30,000 in cash and investments.

The family’s APA is $18,600. $30,000 minus $18,600 equals $11,400. Therefore $11,4000 will be included in the calculation to determine the student’s expected family contribution.

Keep in mind that only parents have an APA, student’s do not. As soon as a student has $1 in their name, it will be counted towards their EFC.

The APA will be adjusted for inflation periodically. Below is the current Asset Protection Allowance for the 20092010 academic year.

Age of Older Parent                     Two Parent Family APA                   One Parent Family APA

35 $28,900 $11,900

36 $31,800 $13,100

37 $34,700 $14,300

38 $37,600 $15,500

39 $40,500 $16,700

40 $43,400 $17,900

41 $44,200 $18,200

42 $45,300 $18,600

43 $46,400 $19,100

44 $47,600 $19,500

45 $48,700 $19,900

46 $49,900 $20,400

47 $51,200 $20,900

48 $52,400 $21,400

49 $53,700 $21,900

50 $55,300 $22,400

51 $56,700 $22,900

52 $58,000 $23,500

53 $59,800 $24,000

54 $61,200 $24,600

55 $63,000 $25,300

56 $64,900 $25,900

57 $66,400 $26,500

58 $68,300 $27,200

59 $70,300 $27,900

60 $72,300 $28,700

61 $74,400 $29,500

62 $76,600 $30,300

63 $79,100 $31,100

64 $81,300 $32,000

65 or older $84,000 $32,800

Based upon Department of Education 20092010 calculations.

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