Calculating net worth for the Free Application for Federal Student Aid (FAFSA) involves determining the combined value of all assets minus all liabilities at a specific point in time. For example, if an applicant has $20,000 in the bank, owns a car worth $10,000, and has $5,000 in student loan debt, their net worth would be $25,000.
Net worth is an important part of the FAFSA process because it helps determine a student’s financial need. Students with lower net worths are generally eligible for more financial aid. In addition, knowing how to calculate net worth can be beneficial in other financial planning contexts.