How will a 529 plan account affect my Beneficiarys chance of obtaining financial aid?
A 529 account is considered an asset belonging to the account owner, not the beneficiary.* This is significant, because when determining financial aid, the government will assume that 35% of the student’s assets will be treated as expected family contributions, or EFC, to be used to pay college expenses the following year. In this same calculation, they will assume that at most only 5.6% of the parent’s assets will be treated as EFC. Assuming that one of the student’s parents is the account owner of the account, assets in a 529 plan account will be treated more beneficially than the same amount of assets held in a custodial UGMA/UTMA account, which is considered an asset of the student for the calculation of EFC. In addition, if the account owner is the student’s grandparent or anyone else, the assets within the account will not be considered as part of the family’s EFC for the following year. One must note though, that the earnings portion of any qualified withdrawal will be treated a
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