Except these:
https://www.savingforcollege.com/article/what-is-a-custodial-529-plan-account
@thumper1 yes there are two different types of 529 accounts, Custodial and Traditional.
And. Custodial can be owned by the student who is under 18. Right?
This is just plain wrong. With all the bad information you have been posting, you are not a FAFSA Guru. I hope that unknowing students/parents are not paying you for help completing a FAFSA.
Minors certainly can and do own 529 accounts of which they are the beneficiary, under what’s known as a UTMA 529. Until the student/beneficiary/owner reaches the applicable age of majority, the account is managed by a custodian who has fiduciary responsibilities. For dependent students, such accounts are treated by FAFSA as a parent asset. For crying out loud, this is clearly spelled out in the FAFSA instructions:
“Investments also include qualified educational benefits or education savings accounts (e.g., Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans). For a student who does not report parental information, the accounts owned by the student (and/or the student’s spouse) are reported as student investments in question 41. For a student who must report parental information, the accounts are reported as parental investments in question 89, including all accounts owned by the student and all accounts owned by the parents for any member of the household.”
This distinction has no meaning for FAFSA purposes. A “FAFSA Guru” should know this.
@thumper1 Yes custodial 529s can be owned by minors
And those student owned custodial 529 plans are treated as PARENT assets for FAFSA purposes.
@BelknapPoint see my initial reply below
TheFAFSAGuru
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@003techie Yes I agree with this comment, the more assets your family have the higher your EFC could be. MAke sure you reported the 529 in the appropriate place, if it is parent owned with you as a beneficiary then it is reported as a parent asset, if you own it then it would be a student asset. Student assets are weighted much more heavily than parents so that could be the issue also.
I clearly stated in this initial reply that a 529 could be owned by the student and if that’s the case then it needs to be reported as a student asset on the FAFSA. I should have clarified that, that refers to student owned UTMAs and UGMAs.
A student does have to be 18 to “open their own 529”, however someone else can open a 529 plan on behalf of a minor child and designate the minor as the owner and as beneficiary.
Apparently the way I communicated that response to @thumper1 you referenced here was not clear and I can see why it may have been interpreted the way you took it. my apologies for that.
but as you will see from my initial response to 003techie I was very clear in indicating that minors could own 529 plans and "UGMA’s and UTMA’s owned by the student are reported as a student asset on the FAFSA regardless of dependency status… This is an excerpt from FAFSA.ed.gov listed just before the except you referenced above.
"Student’s Net Worth of Current Investments
This is question 41 on the FAFSA.
Note: UGMA and UTMA accounts owned by the student are considered assets of the student, and must be reported as an asset of the student on the FAFSA, regardless of the student’s dependency status. Do not include UGMA and UTMA accounts for which the student is the custodian but not the owner."
So referencing your comment copied above, "Minors certainly can and do own 529 accounts of which they are the beneficiary, under what’s known as a UTMA 529. Until the student/beneficiary/owner reaches the applicable age of majority, the account is managed by a custodian who has fiduciary responsibilities. For dependent students, such accounts are treated by FAFSA as a parent asset. For crying out loud, this is clearly spelled out in the FAFSA instructions:
The last sentence you communicated Is not accurate when it’s referring to student owned UTMA’s or UGMA’s as you can see from the excerpt I posted above quoted directly from the FAFSA instructions…if a student owns the UTMA/UGMA it is counted as a student asset on the FAFSA regardless of dependency status.
It appears you have a wealth of knowledge regarding financial aid, which I can absolutely appreciate and the CC Community is fortunate to have someone so engaged and willing to answer questions.
Financial aid is complicated and has many facets, I have been in the field for 30 years and learn something new every day but I pride myself in the knowledge that I do have and the assistance that I have provided to hundreds of families in helping them navigate this overwhelming and confusing process.
And I appreciate all the knowledge you senior members have and your willingness to also help confused families better understand it all.
Families are not “paying” me to help them complete the FAFSA as that is a FREE form.
I created an affordable program to help families navigate it all and maximize their aid offers after working in the field for years and seeing a significant gap between the needs of families and the available services.
Not to mention educational consultants charge thousands of dollars and require families to sign on for expensive packages.
I just want to help people with it all and make it affordable, financial aid is my passion, my heart is in the right place and I am confident in my knowledge. I will continue learning for years to come. You aren’t growing if you aren’t learning.
Rather than trying to discredit professionals in these forums who are volunteering their time to help families maybe you could reach out to them and seek to understand who they are first and offer your feedback in a kinder and more professional way.
We are divided enough as a nation and we are all here to help each other.
Thank you for all you do to help families better understand the financial aid process.
Student owned 529’s are counted as parental assets. They are not treated the same as other UTMA and UGMA accounts.
@cshell2 yes I know, I was referring to student owned UGMA’s and UTMA’s as noted in the last sentence of my first paragraph. Also what is the trick for copying and pasting excerpts like that I have been trying to figure it out. It doesn’t appear the general copy and paste works?
Hit the “Quote” button at the bottom of the post you want to quote.
Choose your text. At the start…put [ quote ] and at the end put [ / quote ]
Delete all the spaces.
I believe Cshell just hit the reply button which will copy the whole post to which you are applying.
@thumper1 oh! Thank you!
@cshell2 thank you!
It doesn’t do that for me. If I hit reply, just a blank box comes up. If I hit quote it copies the entire post and then I go in and delete anything I don’t want.
@thumper1 yes absolutely, as outlined in the FAFSA instructions that @BelknapPoint pointed out… as long as it’s not a student owned UTMA or UGMA, because then it would be counted as a student asset regardless of dependency status.
You are wrong. For dependent students, student-owned 529 accounts are reported on FAFSA as a parent asset. Period. This is an exception to the normal FAFSA rule that UGMA/UTMA accounts are reported on FAFSA as a student asset. Again:
“Investments also include qualified educational benefits or education savings accounts (e.g., Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans). For a student who does not report parental information, the accounts owned by the student (and/or the student’s spouse) are reported as student investments in question 41. For a student who must report parental information, the accounts are reported as parental investments in question 89, including all accounts owned by the student…” (emphasis added)
https://studentaid.gov/sites/default/files/2021-22-fafsa.pdf (see the instructions on page 9)
Wrong, wrong, wrong. A UTMA (custodial) 529 account owned by the student is reported on FAFSA as a parent asset.
As evidenced by your lack of a basic understanding of FAFSA rules and your failure to check readily available sources before posting other inaccurate information, I would say that anyone thinking of sending you money for your help would be better off by keeping their money and doing a little bit of their own research. Those who really do need financial assistance for college can least afford to hand their dollars over in exchange for bad information.
Edited to add:
Don’t just take my word for it.
https://www.savingforcollege.com/article/what-is-a-custodial-529-plan-account
Other corroborating sources available upon request.
@BelknapPoint I did check “readily available resources before posting”
this resource says differently which is taken directly from the FAFSA site https://fafsa.ed.gov/fotw2021/help/faahelp29.htm
And also this resource from the same source you posted from savingforcollege.com if you read under “limits on financial aid”, says the opposite of the resource you shared.
And yet another resource corroborating what I said shared directly by studentaid.gov
https://studentaid.gov/2122/help/students-investments
and another resource here, https://studentaid.gov/help-center/answers/article/fafsa-question-total-amount-of-parents-asset-net-worth-exceed-amount-listed where it indicates “parent assets don’ t include UTMAs or UGMA’s for which parents are the custodian not the owner:”
There is a lot of misinformation and confusion out there, even on “reputable websites” where information should be accurate and updated… but in re- reading the actual 21/22 FAFSA instructions on page 9 it does appear that is the case, and that all custodial accounts owned by the student, if dependent are reported as a parent asset.
For years it was not that way, it is a more recent change and one that I should have been aware of for sure, so I will totally own that . Professionals aren’t exempt from making mistakes. I apologize for telling you your statement was inaccurate.
As I said, I learn something new every day. It is very rare that I have ever encountered a family who specifically owns a UTMA or UGMA, they aren’t as common.
Thank you for all your due diligence in clarifying this for everyone. As I said before, the CC community is fortunate to have you.
Again, I think communicating in a professional and respectful way especially on forums like this is so important for all involved. I am giving you that courtesy and would appreciate the same in return.
From the link above:
If the student is Dependent, the accounts are reported as parental investments in question 89, including all accounts owned by the student and all accounts owned by the parents for any member of the household.
You are apparently still failing to comprehend that a UTMA 529 account, commonly known as a custodial 529 account (they are the same thing), that is owned by a dependent student is treated differently by FAFSA than a student UTMA/UGMA account that is not held in a 529.
From your previous link (note the language in bold):
Limits on financial aid. Any financial assets established in a custodial account are a big “red flag” for colleges deliberating over financial aid to a student. Parental cash held in a state college 529 plan or an education savings account actually weighs less than a custodial account in a child’s name, when it comes to colleges awarding financial aid. Student assets in an UGMA or UTMA account reduce eligibility for need-based financial aid by 20% or 25% of the asset value, much more than the maximum 5.64% reduction for a 529 plan account that is owned by a dependent student or the student’s parent.
The advice in the link above appears to be geared toward dependent students, but it’s hard to tell without being able to go back to the originating web page.
Once again you are confusing UTMA (custodial) 529 accounts owned by a FAFSA dependent student with other kinds of UTMA/UGMA accounts. The language in the link above is referring to a situation where a parent is the custodian of a UTMA/UGMA account that is not a custodial 529 account owned by a reporting student who is considered a dependent for FAFSA purposes. For example, if the reporting student has a UTMA investment (non-529) account and the parent is the account custodian, this would be reported on FAFSA as a student asset, or if the parent is the custodian of a UTMA investment account for the reporting student’s sibling, cousin, etc. this would not be reported anywhere on the student’s FAFSA.
Yes, student-owned 529 accounts used to be reported on FAFSA as a student asset, but the change to report these accounts as a parent asset for FAFSA dependent students happened for the 2009-2010 FAFSA, so it’s definitely not a “more recent change.”
Here’s another source, which is very comprehensive, and even does a good job warning about the possible confusion that can arise when the same word in the financial aid world can mean two completely different things depending on the context:
Examples:
- The word "dependent" when used in the context of FAFSA dependent student compared to use in the context of tax dependent (we see that a lot on CC).
- The word "custodial" when used in the context of FAFSA custodial parent compared to use in the context of a financial account, such as a UTMA/UGMA account (or custodial 529 account) that has a custodian.
Edited to add:
You are sowing more confusion. Not all custodial accounts owned by a FAFSA dependent student are reported as a parent asset; this is only the case with custodial 529 accounts owned by a FAFSA dependent student. A student would report as a student asset any other kind of custodial account that the student owns.
I think you’re a little confused on what an UTMA is. Any custodial account opened on behalf of a minor whether it be a bank account, brokerage or 529 is an UTMA or UGMA. Both my kids have a couple UTMA accounts. An Ameritrade account each that they have less than $1000 in that they picked a few stocks when they were younger, and savings accounts that the grandparents started. I think they’re a lot more common than you think.