I think I may have made an error on our FAFSA. We owned a 529 plan in son’s name. When he turned 18, the bank let us know it was now his, not ours. I assumed that also meant I should count it as HIS asset, a student asset, on the FAFSA. But now I’m thinking that’s wrong? It should still have been included under our assets?
It makes about a $10000 difference on our EFC and I’m hoping to call a college tomorrow to discuss financial aid if that’s the case, so please help! I am so terrible at this stuff!!
Yes, it should be in your assets on FAFSA only. Just a quirk that FAFSA allows that doesn’t match the legal holding of the account. Was it properly identified as a 529 plan on your son’s asset list or just listed as an account?
If the bank is right that when your son turned 18 he took control of the account, than you never “owned” the account; it was/is a custodial 529 account and your son was always the legal owner. Most likely it was funded with UGMA/UTMA money, and a parent was named as custodian (not owner) to manage the account for your son’s benefit until he reached the age of majority.
This type of 529 account is properly listed as a parent asset on FAFSA, and as a student asset on CSS/Profile (in question SA-110A).
Our financial advisor told us the 529 accounts were in OUR name. Our son was the beneficiary, but WE were the owner. It was important when we were trying to get our son on disability. SS agreed with that interpretation.
What do you mean by “asset list”? Assets reported on FAFSA are not described by account or asset type; they are added up and the total dollar figure is reported.
@BelknapPoint , I’m confused. Just logged into the account (Learning Quesrt) and it lists both kids’ accounts with my husband’s name at the top with the words: Account Owner. But when it lists the accounts, it shows $0 for my son’s account. They told us it showed as $0 because he was 18. (That was a freak out moment, but we know it’s okay and have spoken with them).
So sounds like “custodial” as you mentioned, EXCEPT that it clearly states “‘Husband’s Name’-Account Owner” at the top.
I really want it to be our asset! That will lower our EFC by about $10k, I think. We’re calling the fin aid office in the morning to beg for more money!
Wow, just found this on the fund’s website: “How will this account affect my student’s eligibility for financial aid?
Federal financial aid may be available to a student even if a parent or student owns a 529 account. Part of the financial aid process is to determine a student’s financial need. Parents will need to include 529 assets on which they are the Account Owner as an investment in calculating their net worth on the Free Application for Federal Student Aid (FAFSA). Assets in a 529 account owned by a student, or a custodian of the student, will also be considered assets of the parents. Assets held in a 529 account by someone other than the parents or student, such as grandparents, are not considered in the calculation for financial aid.”
Where did the money come from to fund the 529 account?
If you’re talking about an EFC based on FAFSA, then it is treated as a parent asset, even if your son is the account owner. If you’re talking about an EFC computed by the school for the purpose of providing institutional aid, it probably doesn’t matter who owns the account, as long as your son is the beneficiary. Depending on the school’s policies, they will either treat it as a parent asset or a student asset, regardless of who the owner is.
As far as FAFSA is concerned, it gets reported as a parent asset. This doesn’t mean, if it’s a custodial account, that it’s legally yours. This is what I said in my post #4 above.
Oh, that would be a shame. They offered a $25,000 merit scholarship, so one would think they are quite interested in him. They offered no fin aid, but based in our erroneous EFC, we could afford the remainder. (We really can’t.)
If, based on the correct EFC, they offered us $10k in aid, we could come closer to affording. But sounds like they may not care?
We called this morning and they just said to submit official appeal and we’ll hear back end of April, just in time for May 1. That makes thing so difficult.
Does anyone know if they are likely to consider our situation and offer aid?
I think it will depend if the $10k difference in EFC takes the EFC from $30k to $20k, or from $10k to $0. I think most schools won’t do much about the first, as $20k in EFC doesn’t get much aid at most schools, but $0 does get a lot of aid, including federal aid.
A $10k drop in EFC does not mean a $10k increase in aid, unless it is a meets full need school.
@BelknapPoint, thank you, but you also said in #4 above that the parent was custodian, not owner, but as I said in #8 above it clearly states on the fund’s website that my husband is the owner of the account.
If the same account is being referenced in both posts, these statements are incompatible with each other. You said that the account information for your son who turned 18, which lists your husband as the owner, now shows a balance of $0. Where did that money go?? My guess is that the 529 plan administrator moved it to a new account, with your son as the owner, that neither you nor your husband have access to, because your 18 year old son now has control. Either that, or the bank has made a big mistake.
@BelknapPoint OK. I am slowly getting it. At the risk of subjecting myself to further humiliation , I’m going to share additional info and ask another question.
First, I have submitted a correction to the FAFSA putting the 529 amount into parental asset instead of student asset.
Second, as I review the CSS PROFILE, I see that we put the total amount of BOTH his and his sibling’s 529 accounts into line PA-120WF AND put his 529 holdings into line SA110-A. So we did this form wrong, too. I get that for this form it belongs in the student assets (SA-110A), but in our parental assets we should have only listed the sibling’s asset.
BUT, should we have listed that sibling asset in PA105A (custodial account held in parent’s name in name of minor sibling) or in PA120WF because it is a 529? I’m sorry for being so dense, but honestly, it is both! It IS held by us in their names, but it IS a 529, so I don’t know what is correct. Thank you very much for your help.
, I’m going to share additional info and ask another question.