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Student-owned 529 always counts as a parent asset for FAFSA purposes?

atanvarneatanvarne Registered User Posts: 51 Junior Member
This seems to be a truth and I've seen it corroborated repeatedly. But humor me:

Is this true even if the student is over 18 and starts up a new 529 account with his own money? Student is dependent, living at home, and is entering sophomore year in college. The financial aid package is in place for this fall so this question is in relation to the FAFSA for 2018-19.

Thanks for your thoughts!

Replies to: Student-owned 529 always counts as a parent asset for FAFSA purposes?

  • BelknapPointBelknapPoint Registered User Posts: 2,813 Senior Member
    Is this true even if the student is over 18 and starts up a new 529 account with his own money?

    Yes, for dependent students.
  • billcshobillcsho Registered User Posts: 16,503 Senior Member
    It is worse to put it as the student's asset anyway.
  • thumper1thumper1 Registered User Posts: 63,121 Senior Member
    edited August 12
    @billcsho

    For a 529 for a dependent student...it's listed as a parent asset on the fafsa. It's fine to put that in the student name for FAFSA purposes.

    What does your comment mean?
  • billcshobillcsho Registered User Posts: 16,503 Senior Member
    @thumper1 I know it is counted as parent's asset. For OP's question, it would only make it worse if it is counted as student's asset in FAFSA EFC calculation.
  • BelknapPointBelknapPoint Registered User Posts: 2,813 Senior Member
    ^^^
    Make it worse than what?

    If the student doesn't put his own money into a 529 account, it will be reported as a student asset. Using the money to fund a student-owned 529 account is better (not worse) than the alternative.
  • billcshobillcsho Registered User Posts: 16,503 Senior Member
    edited August 12
    Let me make it clear again, having the money as student's ASSET is worse than counted as parent's asset. So it is better to make it parent's asset, in a 529 account or not.
  • cloudysmomcloudysmom Registered User Posts: 625 Member
    @billcsho I just went through this with a grandparent owned 529. When filling out the FASFA if it's in the grandparents name it will not be counted as an asset. However, when disbursing the funds, if you have need based aid it could significantly hurt the aid received so must be put in parents name when funds are disbursed. Also better when disbursed than in child's name, but all this only seems to matter if you have need based aid like we do.
  • privateIDprivateID Registered User Posts: 173 Junior Member
    edited August 14
    @cloudysmom With a grandparent owned 529, if the withdrawals happen after Jan 1 of the student's sophomore year and the 529 is in the grandparent's name, I don't believe there is any impact to financial aid. The withdrawal is counted as income but with the FAFSA (and CSS Profile) now using the prior prior year to determine aid, any income after student's sophomore year will never be part of the FAFSA.
  • BelknapPointBelknapPoint Registered User Posts: 2,813 Senior Member
    ^^^
    This is an excellent point and something to keep in mind, with a caveat: this works if the student completes the undergraduate degree in the traditional four year process, starting in the fall of the first academic year and graduating in the spring of the fourth academic year.
  • privateIDprivateID Registered User Posts: 173 Junior Member
    @BelknapPoint I think you first alerted me about this strategy a couple of years ago, so thank you and for the clarification.
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