<p>I have 2 529 Funds, 1 for each of my children. I am filling out the FAFSA on behalf of child 1 and see that I have to add both of the 529 fund balances together and report these as assets. So, for the next 4 college years child 1's fafsa will carry child 2's 529 balance as a parental asset. I am starting to think that I should change the beneficiary of the 529 plan from child 2 to child 1 and spend down child 1's college bills as they come in. I am looking at 8 years of college bills and feel kind of dumb to realize that child's 2 529 plan works against child 1. Am I making sense here? Kinda let getting a Q in scrabble and you have to hang onto it until you get the U. Thanks y'all.</p>
<p>I think I have exact same situation as yours: two children 4 years apart. However, as you mentioned in your post, assets in 529 are treated as parents’ assets in FAFSA (maybe not in CSS, which is a totally different story), no matter who the beneficiary is. </p>
<p>Spending down 529 assets is a strategy I am going to take too. I think it is a wise idea as it will be beneficial to your family, unless you have more assets in other places.</p>
<p>Remember that as parental assets, they aren’t weighted that heavily in the calculations (not like they were student assets). If you spend down now, will you have enough income to pay out of pocket for kid #2? Plus, remember those assets in the 529 are growing tax free. We had a lot of growth in kid #2’s 529 while we waited for her to reach college age.</p>
<p>It’s because you can change the beneficiary that these funds are counted as parental assets. Remember, however, that only 5.6% of that value (over the protected amount) gets added into the EFC. Unless you’re talking about very well funded 529s, they’re not having much of an impact.</p>
<p>And are you going to get any aid if you didn’t have those 529 plans? If you have a decent income and go to a FAFSA only school, you’re not going to get much need based aid anyway.</p>
<p>They are considered parental asset and you can freely change the benefiary. So they really don‘t care they money is for which kid. I am on the same boat. I am going to use as much as possible the 529 on the first kid to reduce the asset when the second kid go to college.</p>
<p>These are all great answers and all have given me something to think about. Thank you all. I will probably change the beneficiary of the 529 fund to child 1. I don’t want to. I like the idea that each child had their own little nest egg.</p>
<p>Are your assets over the threshold? If so, I am willing to bet your kids are not going to be eligible for grants at even a Profile school … the threshold is pretty high. Even then, you are only assessed for assets in the formula (and it’s not dollar-for-dollar to the bottom line) at 5.6%. I agree with the advice above to leave #2’s 529 alone, allowing it to grow. Why not try some calculators using numbers in both situations to see if it makes a difference for you. </p>
<p>Is this a FAFSA only school? If so, it may not make a difference. What do the NPCs indicate?</p>
<p>I think each child should have his own account. Make sure you are going to benefit before you spend all the 529 plan on the first child. ARE you going to get more money for the second child if you have no savings? Most people don’t. Most people earn too much for financial aid at a typical college and people who have a 529 plan usually have a job, and therefore make ‘too much.’ A 529 is just an asst, and only assessed at 5.6% toward the EFC.</p>
<p>Child 2’s account only works against Child 1 if you would otherwise get need based aid for child 2 when the time comes and there is no savings. Should child 2 be required to take out loans or go to a cheaper school because you used 18+ years of savings on child 1? If you are planning to pay for everything for both, then you should consider the tax benefits to you. If you pay for everything for child 1 with 529 money, you won’t get the AOC credit. If you are borrowing money for Child 1, using the 529 money may be a good idea as then you’ll borrow only for child 2 and have 4 fewer years of interest.</p>
<p>Since the 529 funds are counted as parental assets, what difference does it make if you spend that down first in terms of getting financial aid down the road.</p>
<p>Some things to consider before using all the 529s on child one:</p>
<p>1) Would this reduce your interest free accumulations over those years?
2) Would it affect tax credits you may be able to take if you pay up college costs entirely with 529 for child 1
3) The plans do keep money clearly designated as college funds for each kid. Is this something you find useful in the event something should happen to you and/or SO? </p>
<p>Those are just off the top of my head. It’s not as though you are going to get more/less money shifting the funds around. </p>