Like the title says, I’m trying to determine whether, under certain conditions, you can still get a Pell Grant/other government need-based aid if you have a 529.
In researching online I found this info, but there’s no date on the article. So is it correct?
— A parent is required to list a 529 plan as an asset only if he or she is the account owner of the plan.
Similarly, if the student is considered the account owner (as may be the case with a “custodial 529 account,” which results when UGMA/UTMA assets are transferred to an existing 529 account), then the 529 plan doesn’t need to be listed on the FAFSA.
— If your adjusted gross income is less than $50,000 and you meet a few other requirements, the federal government doesn’t count any of your assets in determining your EFC. So, your 529 plan wouldn’t affect financial aid eligibility at all.
— Distributions (withdrawals) from a 529 plan that are used to pay the beneficiary’s qualified education expenses aren’t classified as either parent or student income on the FAFSA.
Thanks for any help!
You can get a Pell Grant if your FAFSA EFC says you are entitled to a Pell Grant.
Yes, if you qualify for auto $0 EFC or the simplified needs test, you don’t need to list assets.
Someone else here can link the formula for the 2021-2022 FAFSA and you can run it by hand to see if you have a low enough EFC. IIRC, it needs to be $6000 or so…less. You only get the full Pell amount if your EFC is close to $0.
Thanks, so first step is FAFSA. Will use the old one & run by hand.
Here’s the 2022-23 FAFSA formula, not sure it’s final though.
$27K is upper income limit for auto zero EFC, and $49,999 parental income is the upper limit to qualify for simplified EFC calc.
Is your kid’s 529 plan an Individual plan? This is set up with you as the account owner and kid as the beneficiary. Or is the 529 plan a custodial plan, where the kid is the owner but because they are minor the plan needs an adult custodian?
The first type is by far the most common, and parent will report that on fafsa as their asset, subject to $10K asset allowance and then assessed at 5.64% for EFC purposes.
You can also run the fafsa forecaster here: Net Price Calculator
There are some additional qualifiers for auto $0 and simplified needs test. These changed somewhat but they used to be things like qualifying for a means tested benefit.
@kelsmom might know…or maybe there is an online link to the new requirements. It’s not just income.
All the details to qualify for auto efc and simplified calc (beyond income) are in that link above. (details are also in the CB EFC forecaster)
Looks like they no longer use means tested benefits etc in this determination.
So to the OP…do you qualify based on your income?
Thanks, not sure yet. Will try and dredge it all up.
And remember…for the 2022-2023 FAFSA, you will be using your income from 2020.
If the parent doesn’t own the 529 but the student does, wouldn’t the student then list the 529 as an asset?
If the parent qualifies for automatic $0 EFC, then the student’s assets/income are not considered (they will be grayed out on the FAFSA student section) Not sure how the FAFSA form looks if the parent qualifies for simplified assets.
No. If parental information is required on FAFSA, a student-owned 529 is reported as a parent asset.