How do parent and student assets count differently in the financial aid formula?

The aid formula weights student-owned assets far more heavily than parent-owned ones. Under the current Student Aid Index methodology, parents are generally expected to contribute a maximum of around 5.6% of their reportable (non-retirement) assets, while a student's own assets are assessed at a flat 20%. That's why a 529 owned by a parent (or held for a dependent student) is treated as a parent asset and hits aid much less than money sitting in the student's bank account or a custodial UTMA. Retirement accounts and home equity on the primary residence are excluded from the FAFSA entirely. Positioning savings as parent rather than student assets is one of the simplest legitimate ways to protect aid eligibility.