<p>rent02
first of all, let me clarify. If you wish to answer the question for the profile as in YES to financial support from a relative that is your perogative. FASFA does not take relatives support into consideration. While a student may be a beneficiary from a relative’s 529, it is stiil their 529 to do as they wish. There are no guarantees. So the question is really very subjective and open to a very WIDE interpretation. The high cost of education, is a real burden to many families so many folks may opt to interpret the question in an advantageous way. Until the laws change its just the way it is. nothing dishonest about it. Also, don’t apply to schools that use the profile . Jus t my 2 cent.</p>
<p>Seems like I was only half right about FA not being affected when the owner is NOT the parents or student’; correct for FAFSA, not for Profile. According to the link I gave earlier:</p>
<p>“Note also that if a section 529 college savings plan is owned by someone other than the parent or child (e.g., a grandparent), it seems that the plan may be omitted entirely from the financial aid need analysis. There appears to be an intentional loophole regarding the treatment of such 529 plans. (This applies only to the FAFSA. The CSS Profile asks the family to list all 529 college savings plans that name the student as a beneficiary, so plans owned by a grandparent but with the student named as a beneficiary would have to be reported.)”</p>
<p>Sorry, milkandsugar, I didn’t mean to sound judgemental. I was just trying to tease out the reasoning. I know college costs are crushing for so many kids and families! I don’t particulary like it when questions like that are asked if they aren’t clear and verifiable because it’s too personal in how you’re expected to answer it. They probably shouldn’t even ask unless there’s some way of accurately accounting for such things, and one that allows for the changeabilty factor.</p>
<p>Beneficiaries of 529s can be changed once a year
I am not advocating this, but theoretically one could change the beneficiary of the 529 from the college student to a sibling or even a parent (if the 529 is owned by a relative) and technically you could answer no to the question “is the student a beneficiary of a 529 plan?”</p>
<p>Momofaknight, that was my point exactly. There really is no way to verify the information if a student is a beneficiary from a relatives 529. </p>
<p>Rentof2, you are right. They really shouln’t ask the question because of lack of verifiability(wd?). It puts people in a position of questioning if they should be forthcoming or not, because one family’s finances has nothing to do with anothers.</p>
<p>Aside from the financial aid considerations keep in mind that the money can only be used for college expenses (as listed by someone above) without financial penalties/taxes and you can’t take the money for any previous calendar year expenses. For those who have other resources remember to use this money first. You can’t retroactively use it for expenses, ie if you save it for a later year and drop out you can’t use it for freshman year expenses you paid with your own money or loans. The key is also calendar, not school, year.</p>
<p>I can see milkandsugars point, too, in that one could act to take loans and plan to pay them off with the 529 (is that allowed?) then the relative could change their mind, either due to emotions or due to emergency like lost job, illness, losing home, etc</p>
<p>wis, i think you just answered my question!</p>
<p>We did have one profile school with the supplementary question of how much money was also held in 529’s owned by other relatives for the applicant’s siblings, I guess to see if money was being hidden in that way.</p>
<p>Thanks for the reminder that the calendar year is important, wis75. We will be receiving our first college bill any day now, and I need to brush up on all the rules for 529 withdrawals.</p>
<p>You cannot use 529 account funds penalty and tax free to pay off student loans. The expenses incurred must be qualifying education expenses and must be in the year you withdraw the 529 funds.</p>
<p>From the website spotlighted by entomom:</p>
<p>Note also that if a section 529 college savings plan is owned by someone other than the parent or child (e.g., a grandparent), it seems that the plan may be omitted entirely from the financial aid need analysis. There appears to be an intentional loophole regarding the treatment of such 529 plans. (This applies only to the FAFSA. The CSS Profile asks the family to list all 529 college savings plans that name the student as a beneficiary, so plans owned by a grandparent but with the student named as a beneficiary would have to be reported.)</p>
<p>Replace grandparent with uncle and it looks like FAFSA doesn’t require you to report the uncle’s 529; CSS does.</p>
<p>As I said earlier, and others have reiterated, PROFILE wants to know about 529 plans that have you as the beneficiary. </p>
<p>Also, when you get the distribution from the 529 plan, or your college does, that does have to be reported on FAFSA. </p>
<p>The fact that it is a college savings plan means that the intent of the plan is to shelter the money so it CAN be used for college.</p>
<p>CPT - where on FAFSA do we have to report the 529 distribution? We recently did my son’s FAFSA and had a 529 distribution last year and I can’t remember reporting it anywhere on FAFSA. You have me worried.</p>
<p>I was curious about this as well, so I called the FAFSA help line. The person who answered wasn’t very sure of herself, put me on hold and went to check if 529 distributions needed to be reported on FAFSA. She came back with the answer that since the asset is in her grandparents’ name it would not be reported, as many times as I told her I was asking about the distributions, not the asset. so who knows? I don’t think it is income, it is not income for Federal purposes, and it doesn’t fall under any of the tax-free income that I see listed.</p>
<p>From the FAFSA Worksheet A, B, and C, which must be filled out:</p>
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</p>
<p>I can’t find where it is for the student’s assets, but I do think it’s there somewhere.</p>
<p>I looked over the FAFSA info. It appears to be one of those open questions but is used as a loophome. If grandparents pay tuition directly to the school or through a 529, it does not appear that one has to report the transaction on FAFSA. Private colleges that use their own forms or PROFILE want to know about any 529s, but vary on how they treat direct tuition payments from outside parties, especially if made directly. It’s tricky in that the any monies given to a student or on his behalf is supposed to be reported for FAFSA, but there is a lot of gray area when we are talking about gifts and grandparents. From what I just read, it seems to be fine to have grandparents or relatives other than parents have a 529 and pay your college costs, it does not have to be reported. Please, please do your own research on this one if you are in that situation as I am no expert on this, just a mom interested in trying to figure these crazy rules out.</p>
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<p>Ditto here. We took a small distribution last year from our Ds 529 which is in the parents name. I didn’t see anywhere to report a distribution on either the FAFSA or Profile. I guess I also don’t see why they would care. For FA, 529’s (in parents name) are counted as assets, just like any other investment. There are tax implications–they are not taxable if used for qualified educational expenses, but why should their distribution be different from any other investment? What am I missing??</p>
<p>529s in grandparents’ names do not need to be reported as income or assets on FAFSA:<br>
</p>
<p>[Grandparents</a>, 529 plans are great match](<a href=“http://www.bankrate.com/brm/news/529/20071112_grandparents_529_plan_a1.asp?prodtype=pfin]Grandparents”>http://www.bankrate.com/brm/news/529/20071112_grandparents_529_plan_a1.asp?prodtype=pfin)</p>
<p>Distributions of parent-owned 529s are not treated as income by FAFSA:</p>
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</p>
<p>[FinAid</a> | Saving for College | Section 529 Plans](<a href=“Your Guide for College Financial Aid - Finaid”>Section 529 Plans - Finaid)</p>
<p>Thank you. I thought I had read that somewhere but could not find it!</p>
<p>Yes, thank you vbm, that makes sense to me!</p>