Yes, FAFSA can check your bank accounts if your application is selected for verification. This includes both personal and savings accounts, but not retirement accounts. In some cases, you may need to provide documentation for your parents and spouse’s bank accounts.
Your FAFSA form is going to be one of the first truly serious pieces of paperwork you fill out when you get to college. It makes or breaks your ability to get financial aid in your college. Also, it determines how much money you have to borrow for student loans. But, does FAFSA actually check your bank accounts for eligibility?
The basic rules for federal student aid say that they can and will check bank accounts to determine eligibility. However, there is a lot more to this than you would expect. It’s time to talk about what FAFSA looks for.
Can FAFSA ask for bank statements?
Yes. Notice how the FAFSA form requests “the total current balance of cash, savings, and checking accounts.”
When you complete a FAFSA form you are giving your state financial aid agency permission to verify any statement on the form, which includes you savings and checking accounts. This is spelled out on page 2, in the Privacy Act Statement of the form.
“State Certification: By submitting this application, you are giving your state financial aid agency permission to verify any statement on this form and to obtain income tax information for all persons required to report income on this form.”
The Central Processing System (CPS) of the U.S. Department of Education selects which applications are to be verified, but colleges have the authority to verify additional students. About one in three applications get selected for verification, so don’t panic if yours gets chosen.
For help on how to fill in a FAFSA form, read this article.
Does FAFSA check all of your bank accounts to determine eligibility?
Yes. You need to provide a complete picture of your available assets. If your account is selected for verification, they will need to provide statements for all your bank accounts. The program also will check bank accounts for people who are tied to your finances. If you’re married, this will include your spouse. If you are a dependent of your parents, this would be your parents.
Whose bank accounts will get checked?
The answer to that question depends on your age, marital status, and whether you are a dependent. For example, if you are still a dependent, you will need to provide copies of your bank accounts and your parents’ accounts (or your guardians).
If you are married, then they will check your accounts as well as your spouse’s. If you’re over 23, have legal dependents, are married, or are a grad student, you’re deemed independent and you will not have to worry about your parents’ accounts getting checked.
What types of bank accounts will get checked?
Traditional bank accounts, savings accounts, and brokerage accounts will all get checked. If you have a 529 account, then the money there will be checked as well. Retirement accounts, however, do not get included as part of your federal student aid determination.
FAQ about FAFSA’s verification process
What is the Expected Family Contribution?
Your Expected Family Contribution (EFC) is an index number used to determine your eligibility for financial aid. This number is based on the financial information you provide in your FAFSA form and is calculated according to a formula established by law. This formula considers your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security). Schools use your EFC to calculate your federal aid eligibility.
Expected Family Contribution, or EFC, is what the federal government is trying to gauge by looking at your bank accounts. It’s generally assumed that you and your family members will foot the bill for your education—at least partially. When the government looks at your finances, it can get a better idea of how much your family can afford to put forth to your education.
What is Automatic Zero EFC?
Automatic Zero EFC occurs when your family earns under $23,000 per year, or when you meet poverty guidelines. If you are a recipient of SSI, SNAP, or Medicare, you probably will have no EFC to speak of.
How is eligibility determined from finances in bank accounts?
This is a fairly complex issue. We’re going to try to break it down into bullet points to give you the general steps taken for federal financial aid:
- Your personal bank account is going to be the primary determinant of aid. Parents’ accounts will shelter up to $50,000 worth of assets before it starts marking against you for federal aid. If your savings might be a stumbling block, you can reduce their impact on aid by putting them in a 529 plan or using them for smart purchases. Note that a maximum of 6% of the assets of parents (for some families less than 3%) are considered as money available for college.
- Traditional accounts will decrease the federal aid you get by around 20 percent of the amount in the account. Meanwhile, money in eligible education savings accounts and 529s will decrease your financial aid by 5.64 percent of the amount in your account. So, it’s clear that you should migrate funds from traditional accounts to your 529 ASAP.
- How much you earn can also have an impact on how much you can receive. High-income families may not qualify for much or any financial aid, but it’s still worth filling in the FAFSA form because it allows you to qualify for low-interest federal student loans.
How far back does FAFSA look at bank accounts?
FAFSA doesn’t look too far back. They will look at the past two years’ worth of bank accounts. This includes the records from every savings account associated with you as well as the deposits.
Should I empty my bank accounts for FAFSA?
“Empty” is a bit of a strong word here and may not be advisable. If you completely clear out your bank accounts before you file your FAFSA, it’s going to look strange. This may actually get your application flagged for potential fraud. If they find that you have been hiding money, it could lead to legal consequences.
Can I lie about my savings on FAFSA?
Lying is a bad, bad idea—especially on paperwork like FAFSA. If you’re caught lying, you can face fines of up to $20,000 and also get a prison sentence of up to 5 years. That might throw a wrench in your college plans. Moreover, any federal aid that you received from FAFSA would have to be paid back immediately.
- FAFSA has the right to ask you for bank statements and will ask for them if your application is chosen for verification.
- You may also have to provide the bank statements of your spouse, parents, or other relatives that support you financially.
- Transferring money to your 529 savings accounts can increase the aid you receive because the money in those accounts barely have an impact on aid.
- Do not lie on your FAFSA forms!