<p>Can colleges access your 529 savings and use it to determine your financial aid award and/or scholarship?</p>
<p>529 account balances must be included as parent assets on FAFSA so they affect the EFC on which financial aid is based.</p>
<p>There is a good article in the August 2007 Money Magazine on 529 plans. As noted by Swimcat it is part of the parents general assets and therefore will be assessed at 5.64% annually towards the parental contribution.</p>
<p>If the 529 Plan is owned by the student, it will be EXCLUDED in the calculations for 1 more year, then it reverts back to being counted as a parent asset as long as it's in the parent's name, otherwise, as a student asset it will be assessed at 20%/yr!</p>
<p>Mizo or anyone else who knows,</p>
<p>Is that 5.64% number part of the federal methodology, the institutional methodology or both. Do all colleges use it or is it (this seems unlikely given its precision) just a rule of thumb?</p>
<p>The 5.6% of parent assets is the percentage used in the EFC formula in FAFSA (over the protected allowance which varies by by number of parents and ages). Colleges that use FAFSA use the EFC generated by FAFSA as the basis for their financial aid packages. Federal aid is also based on the FAFSA EFC. Schools using instiutional methodology vary as to how they treat assets.</p>
<p>Swim.. does that mean that a parent is expected to use and apply 5.6% of their assets each year to college costs ? and if that figure exceeds the cost of yearly college, there will be no financial aid offered ?</p>
<p>
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Swim.. does that mean that a parent is expected to use and apply 5.6% of their assets each year to college costs ? and if that figure exceeds the cost of yearly college, there will be no financial aid offered ?
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<p>The EFC is based on assets and income of parents and students. The % for parent assets is 5.6% while for students it is 20%. However a certain amount of income and certain parent assets are protected under FAFSA - primary home, retirement savings (401Ks, IRAs etc). Also there is an amount of asset protection based on whether there are 1 or 2 parents (single parents get a raw deal here in my opinion) and the age of the oldest parent. Finaid has a calculator that will give you a pretty accurate idea of your EFC (providing, of course, you enter accurate information).</p>
<p><a href="http://www.finaid.org/calculators/finaidestimate.phtml%5B/url%5D">http://www.finaid.org/calculators/finaidestimate.phtml</a> </p>
<p>And yes the EFC is the amount you are expected to 'contribute' so if the EFC exceeds the COA of the college there will not be need based aid (though merit should not be affected).</p>
<p>Thanks Swim. If the EFC exceeds the COA, is there still any reason to apply for financial aid ? Is filing for financial aid a prerequisite to getting any merit schol. $$$ ? Does NOT applying for financial aid help in any way one's chances at admission, all other things being equal ? ( I see that the college application asks whether finan. aid is being applied for ). Thanks.</p>
<p>I am being told that it effects scholarship money not just financial aid -- even when a FASFA has not been submitted?</p>
<p>I don't understand how colleges can get access to my confidential 529 info????Can anyone confirm? </p>
<p>Thanks.</p>
<p>Bump.................</p>
<p>HAS NOT BEEN APPROVED YET! BUT WOULD HELP!</p>
<p>Bush proposal would make 529 plans more attractive </p>
<p>President Bush’s proposed 2008 budget contains a change that would make 529 plans more attractive as a way to save for college and as an estate planning tool.
Under the proposal, assets in a 529 account would not count at all in determining federal financial aid. They would be ignored entirely when the federal government calculates a family’s expected financial contribution.
Currently, such accounts are considered, although the government typically factors in only about 5 percent to 6 percent of the assets.
This is good news for parents saving for college, but it also reinforces the fact that 529 plans can be a good estate planning tool for parents and grandparents. Family members can contribute up to $11,000 a year to such plans tax-free, and any increase in value of the assets while in the plan is not taxed. In addition, family members can “front load” their contributions – giving up to $55,000 right away and averaging it out to $11,000 over the next five years for tax purposes.
Family members can also retain some control over the investments, and even change the beneficiary – so that if a child doesn’t need the money for college, it can be left in the account to grow tax-free until it is used for a grandchild.</p>