Student Savings & Student Contribution- FAFSA

Paying for College
1

<p>I have a slight dilemma. I’m saving up for a study-abroad trip next year and I’m worried that my little nest egg will drastically effect my financial aid for next year/student contribution. I’ve heard something about a 529 plan that wouldn’t be considered, but I’d need to know that (a) my parents wouldn’t have access to the money/account (b) that I could withdraw money for “miscellaneous” expenses (i.e. I wouldn’t have to actually pay tuition or board with it).</p>

<p>Are there any other options? I’m getting a refund from my school (my current F.A.) into my account and I don’t want to be penalized for saving the money versus just spending it.</p>

2

<p>I don’t know if there is a way that you can both earn money and save it, and not have it count for FAFSA if the savings is in your name. But, maybe someone does know how.</p>

<p>How much will you be earning/saving? </p>

<p>Remember…your earnings will count, too.</p>

<p>To avoid most of this…you might want to do your study abroad between junior and senior year.</p>

3

<p>You can put your savings into a 529 plan, which will then be assessed at the parent rate of 5.6% for FAFSA instead of the student rate of 20%. This might not make a huge difference in your EFC calculation - you’ll have to run the numbers to see.</p>

<p>Funds in a 529 plan must be used for qualified higher education expenses. If they’re used for non-qualified expenses, the withdrawal is subject to a 10% penalty. Here’s a list of qualified expenses:</p>

<p>[Higher</a> Education Expenses That Qualify for 529 College Savings Plans - For Dummies](<a href=“dummies - Learning Made Easy”>Higher Education Expenses That Qualify for 529 College Savings Plans - dummies)</p>

<p>You need to be over 18 (or 21 in some states) in order to open your own 529 account at a bank or brokerage. Your parents would not have access to this account.</p>

4

<p>Can you pre-pay for your flight?</p>

5

<p>*You can put your savings into a 529 plan, which will then be assessed at the parent rate of 5.6% for FAFSA instead of the student rate of 20%. *</p>

<p>Is it possible to do that without putting in the parents name? He said that he doesn’t want to put it where his parents would have access.</p>

6

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<p>Proceeds from student aid are not counted as an asset for FAFSA purposes.</p>

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<p><a href=“http://studentaid.ed.gov/students/attachments/siteresources/CompletingtheFAFSA10-11.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/CompletingtheFAFSA10-11.pdf&lt;/a&gt;&lt;/p&gt;

7

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<p>A 529 can be opened by anyone as long as he or she has reached the age of majority in the state of residence. As I said, if the OP is over 18 or 21, he can open a 529 in his name; his parents will have no legal access to the money.</p>