How does a Roth IRA affect financial aid for college?

Roth IRA balances are not counted as assets on the FAFSA, which can help families qualify for more financial aid. However, withdrawals from a Roth IRA do count as income on the FAFSA, which can reduce aid eligibility in future years.
This makes timing important. Some families use Roth IRA funds strategically for education expenses, but it’s usually better to rely on other resources first to avoid jeopardizing aid eligibility.