We have 2 children (senior & sophomore in high school), each with a 529 plan. In each account there are enough funds to cover 1-2 years of school (obviously depending on the school). Our SAI was high (40K) and we are not anticipating financial aid most likely.
My questions are:
When should we spend the 529 funds? Should we pay 1/4 per year or deplete it asap in hopes that the SAI would go down & financial aid increase? Will colleges increase the aid offer once the 529 funds are gone?
It seems risky to withdraw it early & hope for an increase. But I also wonder if we would receive aid without the 529 savings. I’ve tried to ask two different schools about this, but have not gotten an answer.
Run the net price calculators both with and without this parent asset. See what she net price difference is. Not perfect, but will give you an idea.
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We have a grandparent owned 529 for our kids, and we’ve been taking the “use about 1/4 each year” approach with our older kid (going to an in-state public with a COA ~= our EFC, we’re cash-flowing the rest, it’s unlikely we would get any aid even if we didn’t have access to this 529).
For our younger kid, we’ll have to see which school they end up at, and whether financial aid is playing into the equation at all. They may end up at a different in-state public, with a similar COA ~= SAI. Or they may win a seat at an out of state private where the SAI ~= 1/2 * COA, and we’ll have to suss out the 529 vs financial aid decision as well.
All that to say, I’d wager that the strategy depends on where the kid ends up going to school more than any other factor.
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