Holiday Q&A: How to Appeal a Financial Aid Offer: What to Say (and What Not to Say)

The end of the year is one of the busiest—and most stressful—times for families navigating college costs. Between FAFSA filings, financial aid offers, and looming enrollment decisions, it’s easy to feel overwhelmed. In this Holiday Q&A edition of Ol’ College Try, Matt Carpenter and Peggy Keough tackle some of the most common (and most misunderstood) questions families ask about financial aid, appeals, and college planning timelines.

Below, we break down the biggest takeaways to help you head into the new year informed, confident, and prepared.

How Do Student Assets Affect Financial Aid?

One of the most common concerns parents raise is whether their child’s assets will hurt financial aid eligibility. The short answer: yes, student assets matter—but context is everything.

Assets owned by the student are assessed much more heavily than parent assets. Depending on the financial aid methodology used by a school, student assets may be assessed at 20–25%, which is significantly higher than parent assets. This is why families eligible for need-based aid generally want to avoid holding assets in the student’s name.

That said, there’s good news. 529 college savings plans are not student assets if the parent (or grandparent) is the account owner. Even though the student is the beneficiary, the account is treated as a parent asset—and assessed far more favorably.

If your family has custodial accounts like UTMAs or UGMAs, those are considered student assets. In some cases, it may make sense to reposition those funds, but that decision should be made carefully and with professional guidance.

And one important reminder: saving is not a mistake. Families often feel punished for doing the right thing, but college is expensive, and having money set aside is almost always better than not.

Is It Worth Appealing Financial Aid at a State School?

Many families assume financial aid appeals only work at private colleges. That’s not true.

While it’s fair to say that large, in-demand state schools tend to be more formula-driven, appealing can still be worthwhile, especially if you have a legitimate reason. Appeals are most successful when tied to:

• A one-time income event (bonus, 401(k) distribution, overtime spike)

• A significant change in circumstances (job loss, divorce, illness, death)

• Competing offers from comparable schools

• Errors or inconsistencies in how your aid was calculated

Even highly selective or popular state schools may reconsider an offer when new or clarifying information is presented. And beyond the financial outcome, appealing ensures you’ve done everything possible to secure the best deal.

Bottom line: don’t skip the appeal just because the school is public.

Are Retirement Accounts Included on the FAFSA or CSS Profile?

This is a critical—and often misunderstood—topic.

FAFSA

Retirement accounts such as 401(k)s, 403(b)s, IRAs, and pensions are NOT reported on the FAFSA. They are excluded from the asset calculation, and families should not list them.

CSS Profile

The CSS Profile works differently. While retirement accounts are still not included in the actual financial aid calculation, many schools do ask families to report retirement balances.

Why? Colleges claim they want a holistic view of a family’s financial health. In practice, this information can sometimes influence institutional judgment—especially at schools that promise to meet full demonstrated need.

If your financial aid offer doesn’t align with expectations and you have significant retirement savings, this is absolutely something to address in an appeal. Families should not be penalized for saving responsibly for retirement.

Will Colleges Expect Parents Near Retirement Age to Use Retirement Funds?

Parents nearing age 59½ often worry colleges will expect them to tap retirement accounts to pay for college.

The good news: colleges do not assume or require retirement withdrawals just because you’re eligible.

If you are still working and not taking distributions, retirement assets remain excluded. However, once you do begin withdrawing funds, those distributions count as taxable income, which will affect financial aid eligibility in future years.

If a college ever suggested parents should withdraw retirement funds simply because they can, that would be grounds for a serious appeal.

Why Would a College Give Discounts If Other Families Pay Full Price?

This is a question rooted in understandable anxiety—but it misunderstands how colleges operate.

Colleges don’t build classes made up entirely of full-pay families. They have enrollment, revenue, and diversity targets to meet. Financial aid exists because most families cannot pay full sticker price.

Once a student is admitted, the school wants that student to enroll. Appeals are evaluated on a case-by-case basis, and your financial situation is considered independently of what other families might be paying.

The key to a successful appeal isn’t asking for more money—it’s presenting data-backed reasons that align with the school’s methodology and stated policies.

How Early Should Families Start College Planning?

College Aid Pro specializes in what’s often called late-stage college planning—typically families with students in grades 9–12. That’s when financial aid strategy, school selection, and appeals become urgent.

However, the earlier families engage, the better the outcomes tend to be.

Early planning allows families to:

• Balance college savings with retirement goals

• Avoid costly financial aid mistakes

• Reduce stress during senior year

• Make proactive (instead of reactive) decisions

Families with younger students don’t need to do everything—but doing something early makes a difference.

Final Thoughts

Financial aid can feel confusing, unfair, and overwhelming—but knowledge changes everything. Understanding how assets are treated, when to appeal, and how colleges actually think about money puts families back in control.

As you head into the new year, the goal isn’t perfection—it’s preparation. And the families who prepare early almost always thank themselves later.

Click Here to Listen to the Full Episode! Live on Christmas Day @ 12pm ET