Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

In the context of FAFSA and the assessment of assets, the correct response highlights includible assets that contribute to a family's expected family contribution (EFC). Cash and investment real estate are indeed considered includible because they are readily accessible and can be converted to cash to help fund education expenses.

Cash, whether in checking or savings accounts, is immediately available to the family and thus directly counts towards their assets. Investment real estate, on the other hand, is also recognized as an asset due to its potential to generate rental income or appreciate in value, making it a financial resource that could be tapped to finance education.

The other options include assets that are treated differently for FAFSA purposes. Life insurance policies and retirement plans are generally excluded as they are not considered liquid assets that can be readily used for educational expenses. Similarly, while a personal residence may hold value, it is not counted as an asset on the FAFSA because it's considered a non-liquid asset necessary for daily living. Cash value policies may also contain components that are not included for FAFSA purposes in the same way as readily liquid assets.

Understanding which assets are includible can significantly affect the financial aid package a student might receive, as FAFSA takes into account the overall financial situation of the family. Therefore, recognizing cash