Fafsfa help?

Question

Anyone know why an IRA contribution is counted as income on the fafsfa and gets weighted yet the amount you already have in an IRA is not counted as an asset. Neither amount is really available for spending yet one counts and the other is ignored.

Answer 1

IRA will and they can count it as income, that's why I wont start one for my children thats not fair like you said. It sucks I know. Not much you can do about it.

Answer 2

The amount you contributed was income you had control over....you could have chosen to put it aside to pay for college.  The amount already in the IRA cannot be used (without penalty) for college expenses.

It's a little bit of twisted logic, but that's the way the federal government decided to look at it for financial aid eligibility.