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Questions about Net Assets and Changes in Marital Status

Mark Kantrowitz

February 15, 2010

On the asset section of the FAFSA form if you have $100,000 in stocks but also have a $75,000 margin loan balance would you net this out and put down $25,000 in stock assets? — Rob A.

Yes. You report the net asset value, namely the current market value of the assets minus any debts secured by the assets. Since a margin loan is secured by the stocks you would report the difference ($25,000 in this example) on the FAFSA. After all, if you were to liquidate the brokerage account the brokerage would require you to pay off the margin loan balance before disbursing the remaining money to you. So only the net assets are available to you.

Note that the loan must be secured by the asset for it to be subtracted from the asset value. If you had used a home equity loan to buy the stocks instead of a margin loan you would have to report the full value of the stocks ($100,000 in this example), since the home equity loan is secured by your house, not the stocks. (If the house is your principal place of residence you wouldn’t be able to subtract the home equity loan from the value of the house since the principal place of residence is not reported as an asset on the FAFSA. If the house is a vacation or rental property and not your principal place of residence, on the other hand, the home equity loan would be subtracted from the market value of the house when calculating the net worth of the home because vacation and rental properties are reported on the FAFSA.)

The current market value of an asset is the market value as of the application date. Practically speaking, however, the market value as of the most recent brokerage account statement is sufficient.

I got married 4 months ago and my husband just lost his job! If I put that I’m married would I get the full amount of financial aid? Or should I just stay using my father’s income? — Lashunda W.

You don’t have a choice. If you are married as of the date you submit the FAFSA, you must complete the FAFSA as married.

The FAFSA cannot be updated for changes in the applicant’s marital status. It also cannot be based on an anticipated change in marital status. If an applicant is planning on getting married the day after submitting the FAFSA, the applicant must still complete the FAFSA as single, and cannot change the marital status on that year’s FAFSA after submission. If the applicant wants to submit the FAFSA as married, the applicant should wait until after the marriage to submit the FAFSA.

Since your husband lost his job, you should ask the college for a professional judgment review. If he provides them with a copy of a recent (within 90 days) letter from the unemployment office or other evidence that he’s unemployed, the college can adjust the income on the FAFSA to compensate for the job loss.


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