<p>I think these accounts are still a bit of an unresolved issue with regard to college financial aid. </p>
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<p>Not so. They are clearly addressed in the Federal Application and Verification Guide: <a href=“http://ifap.ed.gov/fsahandbook/attachments/1213AVG.pdf;[/url]”>http://ifap.ed.gov/fsahandbook/attachments/1213AVG.pdf;</a> AVG-16.</p>
<p>Well then, let me rephrase… I think we have refinements yet to come as to how they are considered. Not to mention the fact that people still get different answers from different schools… and that the poster was asking about how they affect the CSS Profile.</p>
<p>Yes, tax laws change all the time, so these plans could be treated differently by the time your grandchild enters college, but for now we should assume there will be little change.</p>
<p>If you open a 529, there are a few things you should know:</p>
<p>If it is in your name, it is not a student or parental asset. It is not reported on the FAFSA filed before the student’s freshman year. However, if it is used to pay educational expenses during the fall of that freshman year, it will need to be reported as income to the student on the next year’s FAFSA. That could result in a hit of 50% reduction in aid the following year.</p>
<p>If you change ownership of the 529 account to the parents (or student), it become a parental asset. If you plan to do this, do so over time, to avoid potential gift taxes, and make sure it is done a full year before the child starts college, so it does not become income to the parent on the FAFSA.</p>
<p>Perhaps the best use of your 529 would be to pay the final educational costs after the final FAFSA is filed. Thus if the child enters college in 2020, the first FAFSA is files 1/1/2020. Assuming she graduates in 4 years, her final FAFSA can be files 1/1/2023, during her Junior year. Have the parents use their assets until then, and then use grandparent 529 for the final 2 or 3 semesters (if you can pay spring bills after filing FAFSA, or use a payment plan to defer payment until after FAFSA).</p>
<p>Just remember the way it’s treated in the CSS Profile doesn’t necessarily have anything to do with FAFSA rules. That’s true of just about anything with regard to income and assets and financial aid.</p>
<p>It think what’s best depends very much on how much need-based aid the student will need and what kind of colleges the student is likely to attend (public, private, well-endowed and generous, less well-endowed and/or less generous.) If it’s not likely the student will receive much need-based aid based on the parents income and assets, then it might not matter much which way you decide to handle it.</p>
<p>It’s complicated… guess that much is obvious. ;)</p>
<p>For FASFA colleges, I think you could have changed/made the 529 owner the NCP and the beneficiary the NCP and take the funds out and paid tax on the gains/penalty…But dont give it to your daughter for college until the last year of college (i know this is tough for most families). Or roll it over to other kid and only take the EFC hit for one kid. Anyone have any thoughts on this?</p>
<p>why did you resurrect such an old thread? I imagine the OP has moved on by now.</p>
<p>Many other members on forum. Answer might help many. Op would be in perfect position to answer thread. Already graduated or have other kids…</p>