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ERIC Number: ED536899
Record Type: Non-Journal
Publication Date: 2009-Jun
Pages: 36
Abstractor: ERIC
Reference Count: 0
IDAs and Financial Aid: Understanding the Puzzle and Sharing Best Practices
Christensen, Tim
Center for Higher Education Policy Analysis, University of Southern California
Individual Development Accounts (IDAs), originally chartered under the federal Assets for Independence (AFI) Act in 1998, may provide an opportunity for increasing access to postsecondary education for low-income youth and adults by providing funds through a mix of their own savings and federal and private funds. However, many IDA savers and IDA practitioners have raised concerns about whether IDA accountholders will face unintended negative consequences as a result of their IDA savings when they apply for financial aid to attend college. At the same time, financial aid administrators are often uncertain about integrating IDA distributions into the financial aid process and policies. This paper is aimed primarily at IDA practitioners for the purpose of helping them understand how IDAs are handled in the financial aid process. This information can also be used by or shared with financial aid administrators to assist IDA practitioners in their conversations with this group. This paper attempts to clarify how IDAs should be handled in the financial aid process, with particular focus on the Pell Grant and other "portable" aid. Current best practices are offered to help IDA practitioners, financial aid administrators, and low-income IDA account holders maximize the utilization of IDAs for educational purposes. Appended are: (1) Assets for Independence Act: Education IDA Policies; (2) Eligibility Requirements for the Automatic Zero EFC and Simplified EFC Formula; (3) Asset Protection Allowance (APA) and the Treatment of Assets for Non-AFI IDA Savers Who Do Not Quality for the Simplified EFC Formula; (4) Definition of an Independent Student; and (5) Glossary. (Contains 18 footnotes.)
Center for Higher Education Policy Analysis (CHEPA). University of Southern California, Rossier School of Education, 3470 Trousdale Parkway, Waite Phillips Hall 701, Los Angeles, CA 90089-4037. Tel: 213-740-7218; Fax: 213-740-3889; e-mail:; Web site:
Publication Type: Reports - Descriptive
Education Level: Higher Education; Postsecondary Education
Audience: Practitioners
Language: English
Sponsor: N/A
Authoring Institution: University of Southern California, Los Angeles. Center for Higher Education Policy Analysis.