<p>Hello FinAid forum! I am a new poster, but have been absorbing knowledge on this board for quite awhile. Thank you to all of the very helpful regular contributors.
I have a rising HS Junior D, and need advice on where to deposit a settlement check from a small estate. This money is 100% designated for college. Should we add it to her 529 account, or would we be better off just depositing it in our long-term savings account? I have read conflicting advice regarding 529s--on one hand, I know they are supposed to be treated as parent assets, but I have also seen comments where people feel 529s have hurt their financial aid. What do you think?</p>
<p>How wonderful to receive a inheritance designated for college! </p>
<p>Since you plan to use it for college anyway, I would put it in the parent savings account. That way it can be used for non-college costs if necessary.</p>
<p>I believe 529 money must be used for college expenses. </p>
<p>You never know…your daughter could end up with a nice scholarship and all of that 529 money might not be needed if it were in a 529.</p>
<p>But that’s just my opinion.</p>
<p>It depends on which state you live in. If your state gives you some tax deduction on the 529 deposit, it make sense to put into 529.</p>
<p>Both your savings and 529 accounts are assessed 5.64% against your child’s financial aid.</p>
<p>The only advantage to 529 over parent savings is possible tax advantages, profits on 529’s are tax free if used for education. Unless you have a sure fired profitable investment, it is probably easiest to leave it in parent account. What’s the window to use it? If some of it is not needed for four or five years it might be better off invested in a 529. Anyone know of a 1 year guaranteed 529 investment account like a moneymarket that pays anything? Doubt it would keep up with tuition increases.</p>
<p>529s that can hurt a student’s financial aid are ones owned by a grandparent or other family friend or relative. If the parent or the student owns the account, it’s treated like a parent asset just like money in a savings account… so it doesn’t matter too much where you put it. I think the other posters have a point about the flexibility you have with it in a savings account.</p>
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<p>Check into the Private College 529. It has a guarantee that it will keep up with increases in college tuition. You buy in at a certain percent of current tuition, and it will pay that percent of tuition when cashed in. So for example if you prepay 20% of tuition in today’s dollars into the fund, say $5000, it will pay out 20% of tuition on later years’ dollars, say $5500 if tuition has increased 10% over the years that the money was in the plan. The funds need to be in the account 3 or more years before they can be withdrawn, so the account should be funded prior to the first year of college.</p>
<p>If your child doesn’t attend one of the colleges in the plan, the funds can be withdrawn or rolled over into another qualifying 529 plan.</p>
<p><a href=“https://www.privatecollege529.com%5B/url%5D”>https://www.privatecollege529.com</a></p>