It's Not How Much You Saved. It's Where.

Two families. Same income. Same $100,000 saved for college.

One gets meaningfully more financial aid than the other.

Nothing separates them except whose name the money is sitting in.

That's mistake number five, and it costs families more real dollars than anything else on my list of the 12 deadly college planning mistakes.

Start with the vocabulary, because it changed and a lot of people are still using the old word.

What used to be the EFC, the Expected Family Contribution, is now the SAI, the Student Aid Index. It's what the formula thinks you can pay for one year. Lower is better. A lower SAI means more eligibility.

It gets calculated differently depending on which form a given college uses. The FAFSA is required by every college in the country. The CSS Profile is required on top of the FAFSA by roughly 400 schools. Some colleges want other forms too. Your first job is simply finding out which forms each school on your list actually requires, because getting that wrong costs you everything downstream.

Now, the part that matters most.

Parent income gets assessed somewhere between 22% and 47%. There is not much you can do about income in the year they're looking at it.

Assets are where the room is. And this is the piece almost nobody knows:

Money in a parent's name is assessed at roughly 5.6%. On $100,000, that's about $5,600 against you.

Money in the kid's name is assessed far more aggressively. That same $100,000 in your child's name can cost you up to $25,000 a year in eligibility.

Same money. Same family. Same total saved. Different name on the account, and roughly a $19,000-a-year swing.

Read that again if you have money sitting in a custodial account because somebody told you fifteen years ago it was a smart move.

It's not how much you've saved. It's where.

While I'm here, some recent changes worth knowing.

The multiple-kids-in-college break is gone. This is the worst of the changes. It used to be that having more than one child in college at the same time increased eligibility. On the current FAFSA it doesn't. You can have three kids in college and be treated identically to a family with the same income and one kid.

Divorce rules changed. It used to be relatively straightforward to have the lower-income parent file. That's harder now.

Business owners caught a break. For most families, a business you own is not counted against you on the FAFSA. That went back and forth for a couple of years and it's now back where it used to be. The CSS Profile treats it differently.

Grandparent 529s stopped being a trap. It used to be that money from a grandparent's 529 would quietly hurt eligibility the year after it got spent. That penalty is gone. Genuinely good news.

And one flaw worth naming, because it will annoy you and there's nothing to be done about it: the formula ignores cost of living. A family in the Northeast and a family in a much cheaper part of the country, same income, get treated exactly the same.

Fair? No. Real? Completely.

Plan against the formula that exists.

Onward.

-Andy "It's Where, Not How Much" Lockwood

P.S. There are account types the formulas don't count at all, which is a longer conversation than a blog post and most of the reason I wrote a book about it. We go through it properly inside the Lockwood Inner Circle, same as with our private 1:1 college advisory clients. A dollar gets you in: lockwoodinnercircle.com