FAFSA vs. CSS Profile - A Breakdown of the Differences
The CSS Profile is much more extensive than the FAFSA and digs deeper into the family finances. Below are the main differences.
● Both parents must fill it out. Custodial & Non-custodial. FAFSA is only custodial parents. The custodial parent is the parent you live with the most time throughout the year.
● For the CSS, both parent’s new spouse’s income/assets comes into play. FAFSA only counts custodial parent’s spouse’s income – CSS counts both parent’s income as well as both parent’s spouse’s income. FAFSA gives a break to divorced parents who arrange for the low-income parent to have primary custody.
● If step-parent also has children in college, this is taken into account.
● Prenuptial agreements and other legal documents are not considered for the FAFSA/CSS. They don’t care if prenup says step-parents aren’t financially responsible for education expenses. Step-parents marry into your family and there are financial ramifications.
Home value/business value/529 plans:
● The Profile aid application does a much deeper dive into your pockets. It counts farms, businesses, home equity, annuities and those grandparent-funded 529s. For FAFSA only parent/student owned 529 accounts are counted as assets.
● Assets Excluded from FAFSA: value of your house, value of your small business with less than 100 employees, 529 college savings accounts not controlled by the parent or the student (for example, one controlled by a grandparent).
● 529 plans held in parent’s/student’s name are counted as assets in both FAFSA and CSS calculation. Keep in mind, there are different tax rates for parent’s assets and student’s assets. Under all formulas, student assets are taxed more heavily. Therefore, it is better to keep everything in the parent's name. 529 Plans are the one exception to this rule. Weighed the same whether its student or parents name on account. You typically see them in parents name and student listed as beneficiary. If your grandparents opened a 529 account then it is not counted as an asset, but when the money is withdrawn to pay school expenses this money is counted as income for the student. So either way they get you.