Financial Aid Help

[ny96]

A couple of questions if anyone knows about financial aid.

We are looking at schools for DS who will be entering middle school next year. Some of these schools run upwards of 50k, a cost we do not want to incur without some aid, and it looks like based on our incomes we would qualify for aid at all of the schools we will be applying to. The question is, ds has a large 529 plan that his grandfather is the owner of. So if ds is just the beneficiary and we are not the owners, then that would generally not be factored into any financial aid decision, right? I know that every school might have their own processes.

[sarahsays]

I can't speak for private middle or high schools, but at the college level the plan does not count as an asset unless it is owned by the student or parent(s).

[plutosmoon]

College aid professional here. Private secondary schools can vary wildly in their treatment of 529s and savings in general.

Aid formulas are generally highly income driven, for example the aid formulas my college uses only expects parents to spend about 3-5% of total non retirement assets after sizable savings allowances. On the income side we might expect 25-50% of discretionary income be used. My understanding from the handful of colleagues I know at secondary schools is they want parents to still have savings for college, since they expect their students to attend pricey colleges. They tend to exempt savings at higher amounts than college, but again wide variation.

Personally, I would not report it unless specifically asked about grandparent 529, or will actually be using it to pay for the private school. You don't own it and don't control it, the grandparents have zero obligation to actually use the funds for your kid as they can change the beneficiary at any time. You could always have them temporarily change the beneficiary, so your son isn't even on it when applying for aid.

[cricketwife]

I don't know the answer to your question, but on the financial aid application I fill out for my kids' private school, you would have to delcare it. I have no idea how it would be calculated in the decision.

Question from the FA application:
Are there any other 529 Savings Plan accounts held by someone else with this student as beneficiary?

[niq]

At k-12 schools I think anything goes.

At the college level, the FAFSA simplifications mean that grandparent 529s don't affect aid decisions anymore, assuming the actually simplify the FAFSA next year like they're supposed to. This used to be a big issue in college financial planning (withdrawing from a 529 not in the parent's name was considered untaxed student income). collegeplanningteam.com/new-fafsa-rules-create-grandparent-loophole-for-529-plans/