College Savings And Potential Aid Are Mutually Exclusive
While this one is about student loan, it is more about how parents can actually reduce the loan amount by saving up for their child’s education. One method of saving is by investing in a 529 college savings plan. However, many parents don’t do that because they worry that a 529 plan will affect the possibility of their child receiving any financial aid in the future.
Well, though the answer may have changed today, the basic premise about which the parents are worried, doesn’t stand up to scrutiny. If you plan to save up for your child’s education, will you change your decision just because your child may not receive aid in future? I’m sure the answer is No. Well, getting back to the plan, from July 1, a 529 plan — whether it’s prepaid or a savings plan—is considered a parental asset in the determination of federal financial aid. Washingtonpost.com reports:
Interestingly, a 529 plan owned by a student or within custodial accounts, which can be opened under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, is not counted at all in the federal formula.
Read more: Don’t Tie College Savings to Potential Aid
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