Education Questions and Answers
When applying for financial aid, will money in a 529 account count against you?
Question:I have a 16 month old son and I set up a 529 account for him. I read before that as of now, when applying for financial aid they don't look at 529 account balances. But a person at my bank just said that it will hurt his chances of financial aid. Anyone know the answer?
Answers:
When you apply for financial aid, they ask about the net worth of your investments. If you go here (http://www.fafsa.ed.gov/fotw0708/help/fo... you can see that you must include your child's 529 as part of your assets.
Will it count "against" him? Yes, he will get less aid. But that is because he deserves less -- you have the ability to set aside money and have already done so for him. Financial aid is reserved for those who cannot afford college alone. He will likely still get more than enough in loans.
Besides, he's 16 months old. You may have enough to pay for his entire education by then or he may decide not to go or he may get scholarships. It's really too soon to tell.
First, it is always to your benefit to save for a child's education. As of now, a 529 plan will need to be reported as an asset of the parent when applying for financial aid. The value of the plan will be calculated in the formula just like any other asset (i.e. stocks, bonds, 2nd homes, etc.). However, who knows what future members of Congress will do...
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