Who should own 529 Educational Savings Account?

When considering a college student's eligibility for financial aid, who owns their 529 account makes a difference. Sarah Mouser, writing for Advisor Perspectives explains.

"Parent-owned 529 plans are treated differently than grandparent-owned 529 plans when applying for financial aid and completing the free application for student aid (FAFSA)."

"When a 529 plan is owned by a parent or student, distributions are ignored. But when distributions from a 529 plan occur from an account owned by a grandparent or other relative, it is considered untaxed student income, which is important because income carries a much more significant impact on aid eligibility than assets. This income can reduce eligibility for need-based aid by as much as half of the withdrawal."

"When completing the FAFSA, there is a two-year “look-back” period. For families filing the FAFSA in fall 2020, they will be completing this form using 2018 tax data. For a student attending a four-year university, grandparent-owned 529 plan distributions used to pay for expenses in their first few years of college will impact FAFSA filings for their later years."

Get complete details at:
https://www.advisorperspectives.com/articles/2020/05/19/who-should-be-the-owner-of-a-529-plan

The College-Aid Shuffle

Just be glad your child is not going to Sarah Lawrence College to the tune of $59,170... per year! The January 21-22, 2012 Wall Street Journal has a great article on ways to obtain more financial aid for your college-bound kids. Examples include postponing income, accelerating tax deductions and "moving assets from one account to another." The strategies work best if you have a couple years before junior or juniorette heads to campus. "But even families with incoming freshman can make moves to maximize their aid and scholarship packages." Best of all the article emphasizes the importance of placing your retirement security first. It's a mistake to not apply for financial aid assuming you won't qualify. Fill out the Free Application for Federal Student Aid (FAFSA)! "If your child is attending a private college, families also must fill out the College Board's CSS/Financial Aid Profile, which schools use to determine how to distribute their own aid funds." The article contains multiple suggestions for maximizing financial aid.
If it's too late to pick up today's WSJ go to www.wsj.com and search for "College-Aid Shuffle." You may need to subscribe to have access to the full article. Or check to see if your library carries the WSJ.