Wealth Insights
Rethinking financial aid: What high-net-worth families should know

Article 11 min read Published June 23, 2026

Understanding FAFSA eligibility, cost of attendance, and asset strategies to reduce the true cost of college.

Key takeaways

Sticker prices can be misleading: Many families don’t pay the full published cost of college thanks to financial aid and institutional discounts.
Financial aid is still possible for high-income families: There is no strict income cutoff for federal aid eligibility, though need-based aid may be limited at higher income and asset levels.
Net college costs may be decreasing: Despite rising tuition, grant aid and public investment have helped reduce out-of-pocket expenses for many students.
Don’t leave money on the table: High-net-worth families skip the FAFSA due to misconceptions about eligibility.
Asset structure matters: Different asset categories are assessed at different rates, which is known to impact aid eligibility.
Planning matters: Tools like 529 plans, trusts, and strategic financial guidance are used to help families manage education costs more effectively.

The estimated cost to raise a child from birth to age 18 is north of $300,000, according to CBS News which offers a state-by-state breakdown. This headline-making figure does not include the often-hefty price tag of a college education. For the 2025-2026 academic year, average tuition costs for in-state public, out-of-state public, and private institutions ranged from $11,371 to just under $45,000 according to U.S. News.

The good news is that typically only a quarter of public university students pay full price for tuition while an even smaller percentage of private institution students are paying ‘sticker price,’ according to an article from Brookings. And if you or your student are looking for an M.B.A. program, a recent Wall Street Journal article notes that some universities are offering reduced tuition citing the Department of Education’s July 1, 2026, $100,000 cap on graduate student loans.

Don’t overlook the potential for financial aid.

While the published cost of attendance (COA) has reached a record high at some schools, the Center for American Progress notes that the net cost that students pay after grant aid and student loan borrowing has actually declined in recent years. The organization cites steady federal investment and increasing state funding as a notable reason for this decline in out-of-pocket costs.

Financial aid can come in many forms including scholarships, grants, work-study, and student loans. The well-known Free Application for Federal Student Aid (FAFSA) form is the gold standard (though not without controversy) path to financial aid for the majority of prospective college students, though 3 out of 10 families do not complete the application. Among the common reasons for skipping this step – the misconception of eligibility or lack thereof.

How much money is too much for financial aid?

According to the Federal Student Aid Office of the U.S. Department of Education, technically, there is no income limit to apply for federal financial aid. However, if your family’s Adjusted Gross Income (AGI) and assets exceed the Cost of Attendance (COA) at the schools you apply to, you may not qualify for need-based grants. This means that depending on what schools your student is applying to, they may still qualify for some financial aid even coming from a high-net-worth family. There are of course other eligibility criteria to consider.

The federal government and colleges use the financial information submitted via FAFSA to determine an individual’s Student Aid Index (SAI). This calculates eligibility for need-based grants, scholarships, work-study, and loans.

How do financial assets impact financial aid eligibility?

Parent and student-owned assets may have an impact on financial aid eligibility. According to an article from savingforcollege.com, parent assets have a more limited impact because parents are expected to contribute a smaller proportion of their wealth, up to 5.64% of assessable assets, to pay for their child’s college education. Student assets are assessed at 20%.

It is important to understand what assets are required and reportable on the FAFSA form to maximize financial aid eligibility.

Below is a list of assets that must be reported:

Equity in investment real estate (excluding primary residence)
Cash in savings/other bank accounts
Uniform Gift to Minors Act and Uniform Transfers to Minors Act accounts
Stocks and bonds
Mutual fund assets
The value of 529 plans and Coverdell ESAs
Commodities

Cash gifts to students are no longer counted as untaxed income on the FAFSA as of the 2024-2025 academic year, which makes it easier for grandparents or others to help pay for college without affecting financial aid eligibility.

Additionally, these assets are not required on the FAFSA form:

Your family's primary residence (the home you live in).
Family-owned businesses with 100 or fewer full-time employees.
Farmland (if this is where the family resides).
Commercial fishing business (family-owned)
Retirement accounts including 401(k)s, pension funds, and non-education IRAs.
Achieving a Better Life Experience accounts for people with disabilities, life insurance policies, and cars.

Three items on the above exclusion list are new for 2026 based on updates from the One Big Beautiful Bill Act as announced by the Federal Student Aid office of the U.S. Department of Education.

The bottom line:

No matter your income or financial position, completing the simplified FAFSA may be one of the most important steps in your college planning process. With no formal income cutoff, the application keeps the door open to a wide range of financial resources from grants and scholarships to federal student loans and institutional aid.

Three things to do

Consider how your student will pay for additional expenses with this guide to financial support in college.
Explore how a college trust could help you make higher education part of your wealth strategy.
Talk with your advisor about the benefits of 529 plans – and other ways to save for college.

Frequently asked questions:

No. There is no official income cap to apply for federal financial aid. However, higher income and assets may reduce or eliminate eligibility for need-based grants.

Yes. Even families with substantial wealth may qualify for certain types of aid, such as merit scholarships, federal student loans, or institutional aid, depending on the school.

Financial aid is awarded based on several factors, including, but not limited to:

Family income (AGI)
Assets
Household size
Number of children in college
Cost of Attendance (COA) at the institution

Parent assets are assessed at a lower rate (up to ~5.64%)
Student assets are assessed more heavily (up to 20%)
Some assets (like retirement accounts and primary residence) are excluded

Yes. Many families mistakenly assume they won’t qualify and miss out on aid opportunities. Completing the FAFSA is often required for federal aid, loans, and some scholarships.

Financial aid may include:

Grants (typically need-based, do not require repayment)
Scholarships (often merit-based)
Work-study programs
Student loans

Colleges often provide discounts, grants, and institutional aid through scholarships, work study, or other financial aid programs, to reduce the net cost.

Not necessarily. Some higher-cost schools offer more generous aid packages, which can offset the sticker price.

Strategies include:

Saving through 529 plans
Setting up education trusts
Working with a financial advisor to align education funding with broader wealth goals

If your family’s resources exceed a school’s total cost, you are unlikely to qualify for need-based aid but may still be eligible for non-need-based options.

Yes. Filing can provide access to: