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 APA35 $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.
