Education Planning Common Questions

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How will my 529 account be treated for financial aid purposes?

Answer:

The federal government treats 529 plans (college savings plans and prepaid tuition plans) as an asset of the parent, if the parent is the account owner (so accounts owned by grandparents or friends don't count at all). Under the federal financial aid formula, parent assets are assessed at a rate of 5.6 percent. Any distributions (withdrawals) from a 529 plan that are used to pay the beneficiary's qualified education expenses are not counted as either parent or student income.

Colleges typically treat 529 plans the same way when distributing their own institutional aid. However, colleges might differ in their treatment of plan withdrawals. Contact the financial aid administrator at each individual college for more information.

GE 37673 (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.

Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent advisor.

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