I opened a state savings plan account for my grandchild many years ago, and he's now filling out financial aid applications. Do his parents need to list the value of the account in their assets, or does my grandchild list the value of the account as his asset?
Answer
No. You are the owner of the account, not your grandchild's parents and not your grandchild. Therefore, the parents aren't required to list your state savings plan as one of their assets under the federal financial aid rules, and your grandchild doesn't list it as one of his assets. This means that the value of the account won't affect the amount of federal aid your grandchild will receive. However, the financial aid office at a private college may have different rules when disbursing the college's own financial aid.
It's a different story once funds are distributed from the account. When your grandchild receives funds from the account to pay college expenses, he must include the earnings portion (gain) of that distribution as income on next year's federal financial aid application. Under the federal financial aid rules, 50 percent of a student's income (minus a standard living allowance) must be applied to college costs before any federal financial aid is received.
GE 37674 (03/07)
If you are investing in a 529 plan outside of your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan.
529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal.
Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer's official statement. Please read the official statement carefully before investing.
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