<p>OK, this is my first post asking for advice. </p>
<p>My daughter is a college freshman this fall; shell attend a private school where we will be paying full freight, about 50K. We have a son who will be a high school junior this fall; hell likely be off to a similarly pricy school in two years. We live in Manhattan, both wife and I work, combined annual income a little under 200K, were maxing out our 401K/403B contributions.</p>
<p>Weve accumulated about 45K in each kids 529 plan, and have other funds available through taxable savings and current income. So, the question is: should we use my daughters entire 529 to pay for the first year, or divvy it up throughout her undergraduate years? Were hoping to qualify for some financial aid when weve got two in school together in two years. Daughters school has told us that we may well qualify for aid at that point.</p>
<p>My take is that theres not much difference one way or the other. But Im not really sure. Any thoughts? Thanks.</p>
<p>We also have a 529 for daughter, but we are spreading out over 4 years. Our EFC is 30,000, so with the small scholarship D received along with Stafford loans, and we are taking out a small PLUS loan, this will cover. We were originally going to front load her tuition, meaning spend more upfront, not take out a PLUS loan, and pay less at the end of the four years, because she will qualify for more Stafford loans as the years progress, but we opted to spread it out, because we didn't want to come up short later, also H and I are abled bodied people working now, we don't know what the future will be with this current market. We just want to be prepared in any event.</p>
<p>If you will qualify for financial aid, then using the 529 could reduce the amount that the students will qualify for. Of course, if the 529 is in their name, then it will reduce the amount of aid anyway, at the students' rather steep %age. If the 529 is in the parents' name, it will reduce the FA also, but at a less steep rate. My mother has a 529 for my D, in the grandmother's name. We are planning to use it during the senior year, assuming we can hold out until then, because our FA is quite good at the present. We do have a bill of several thousand each year, which we can manage, and we will use the 529 to pay the whole senior bill. That way, we will not lose out on any FA because of the 529 funds, which are not in the student's name. Sorry if this is confusing...</p>
<p>Obviously everyone is trying to juggle many financial activities at the same time. </p>
<p>The perspectives; You, the student, the school, the investment, the Alternatives. It is the Alternatives that you should be investigating. Example: Is the expected rate of return for the 529 exceed that of getting a PLUS loan? Our UTMA in 2000-2003 tanked, even though I had the funds in conservative balanced portfolio. Should I sell losing positions that if sold would never henceforth be able to recover but were yielding 5% in interest and dividends, or should I take loans at the then 4.5%? </p>
<p>Do not put much credence in future merit aid and need aid, simply because it may never happen.</p>
<p>I don't really see how it would make much of a difference. If you do not use the 529 account up how will you paying the difference? For financial aid calculations an (unprotected) asset is an asset whether it is in a 529 account or another savings vehicle. When it comes to the day you have two in school the money in the 529 account will have the same impact on your EFC if it is in a 529 account or if it is in stocks. </p>
<p>The only difference I can see off hand is that selling stocks to pay for school would have an affect on income, probably increasing it in the year sold, while selling out 529 funds to pay for qualified education expenses would not have that affect on income. That may be something to take into consideration timing wise from the point of view of avoiding increasing your income in the years where you may qualify for some financial aid.</p>
<p>
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Of course, if the 529 is in their name, then it will reduce the amount of aid anyway, at the students' rather steep %age.
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For FAFSA the 529 being in the students name will not make a difference as it is treated as the parents asset under the rules passed this year. No idea how profile treats it.</p>
<p>
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If you will qualify for financial aid, then using the 529 could reduce the amount that the students will qualify for.
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How would using the 529 account reduce the amount the student would qualify for? We used 529 account funds last year - they are not treated as income for tax purposes so our income did not increase. But our 'assets' are reduced so our EFC would actually go down thus increasing the aid the student would qualify for.</p>