<p>If money in a prepaid tuition plan that is owned by grandparents is used for college tuition for a grandchild does it get reported in either the FAFSA or Profile?</p>
<p>Does it show up in the following year on either form and how would it affect the EFC in either the year it is used or the following year?</p>
<p>Under the new laws passed back in February, it shows up only as an asset of the owner, in this case the grandparent, who is not applying, so it doesn't show up anywhere.</p>
<p>The new law also changed the determination for some kinds of 529s which had been treated very harshly so now 529 payouts are treated like cash payments, no change to your EFC.</p>
<p>Thanks for your reply. </p>
<p>I am unsure what you mean by the payouts being treated like cash payments. Will the money need to be put on the following years FAFSA or Profile as some kind of payment or gift?</p>
<p>Nope, it will be ignored, just like a cash payment to the bill from any other source.</p>
<p>Thank you.</p>
<p>Barkowitz, you said: "The new law also changed the determination for some kinds of 529s which had been treated very harshly so now 529 payouts are treated like cash payments, no change to your EFC."</p>
<p>Are you talking about pre-paid tuition plans? I thought the law change made these plans an asset of the owner, not the beneficiary. And wouldn't they be included at the pay-out per hour rate, as an asset of the parent/owner?</p>
<p>Am I confused?</p>
<p>And how does FAFSA view testamentary trusts, in the name of the parent, but with parent and student as co-beneficiary's. Is this an asset of the parent, or of both parent and student?</p>
<p>Let me try to explain. You are correct that pre-paid tuition plans are the aspect that has changed and that they are now treated as an asset of the owner (not the beneficary); prior to this change in the law, the amount used for the academic year under these types of plans was consider financial aid, and had to be subtracted from a student's financial need. </p>
<p>In the example which started the thread, the grandparents are the owners of the plan, so no amount would be included on the FAFSA or Profile, since the plan is owned by the grandparents. In the case where a parent owns an account, the total value of the account (whether it is a college savings plan or pre-paid tuition plan) would become part of the parent's assets for both FAFSA and Profile.</p>
<p>Trusts of any kind are viewed as an asset of the owner as well, and with a trust such as you describe, my standard rule of ownership is to follow the interest earned by the investment. If the interest is reported in the student's name, then it is the student's asset. If the interest is in the parent's name, it is the parent's asset.</p>
<p>Barkowitz: Thanks. What if it's a complex trust, where interest need not be distributed at all? Both the parent and multiple children are beneficiaries, with sprinkling provision at the discretion of an independent trustee. Remember, this was a testamentary trust, not a parent-grantor. Education is a purpose of the trust, but also health and maintenance. Would you attribute ownership per capita? Or 100 percent to the parent, after whom the trust is named?</p>