529 Accounts and& Financial Aid
Learn how 529 plans can
affect financial aid
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To be eligible for federal financial aid (including grants and federal student loans), you’ll need to submit a Federal Application for Financial Student Aid (FAFSA). The FAFSA will ask you to report the assets held in a 529 account for your dependent student.
A 529 account owned by the parent, with the student as beneficiary, will have a much lower impact on financial aid than another type of account held in the student’s name.
In making decisions about eligibility for federal financial aid programs, the U.S. Department of Education takes into consideration a variety of factors, including the assets owned by the student and the assets owned by the student's parents. They generally expect the student to spend a substantially larger portion of his or her own assets on educational expenses than you, the parents. It’s important to know how these assets can affect financial eligibility.
Assets held in the parent's name are considered at a rate up to 5.64% (the highest rate on a tiered scale) when determining eligibility for financial aid; 529 accounts held by the parent with the child as a beneficiary are considered parental assets.
Assets held in the student's name are considered at a rate of 20% when determining eligibility for financial aid.
Assets and income are disclosed on the FAFSA and though some assets are exempt from the calculation, savings, investments, business interests, and real estate holdings are considered in the calculation.
FAFSA is used to put together your financial aid package, including grants, work-study, federal student loans, and even state and school financial aid.
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