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COLLEGE SAVINGS 101

Does a 529 plan affect financial aid? (Script)

03/16/2017

QUESTION:
Does a 529 plan affect financial aid?

Watch video.

ANSWER:
Does a 529 college savings plan affect financial aid?
Yes… but not as much as you might think.
Most schools use the FASFA form to determine your Expected Family Contribution, or, EFC.
Savings in a 529 plan = parental assets on the FAFSA.
Why is that good?
Parental assets are treated favorably compared to student assets.
• Percent of assets reported on the FAFSA:
Parental – 5.64% (maximum)
• Student – 20%

Here’s an example:
Dana’s parents have $30,000 saved in a 529 plan.
How Dana’s college savings affect financial aid- The 529 plan only increased Dana’s EFC by a maximum of $1,692.
A lower EFC means more financial aid eligibility.
And it gets better…
Qualified withdrawals from a 529 plan aren’t counted on the FAFSA as long as a dependent student or their parent owns the account.
And Coverdell ESAs enjoy the same treatment, too.
So, Save Away!

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