<p>Well, there are others more knowledgeable than me on these boards, so perhaps they will be able to give you more accurate information if mine is not quite right, but I believe that money spent on your behalf by someone other than your parent(s) – so ‘untaxed income’ to you – is assessed at 50%. So if your uncle’s 529 issued you, say, $5000 towards your expenses (tuition, fees, room & board, books) then in the following year’s FAFSA calculation it will determine that you have $2500 available to put towards the next year’s costs. That could raise your EFC, but students do have a limited income allowance (somewhere in the range of $5000, if I recall) before their income has any effect on their EFC… so the upshot is that you could still earn $2500 from a job (federal work study jobs don’t count, by the way) and that combined with the “income” from the 529 would still leave you under the allowance. However if you earned $4000 from a job, then the FAFSA would determine that you have $1500 to contribute from your “income.”</p>
<p>You could accept as much in subsidized loans as they give you (subsidized loans will not accumulate interest while you’re still in college or grad school), and save the bulk of the 529 for you senior year of undergrad (you won’t be filing the FAFSA as a dependent student after you file in Jan/Feb of your junior year of undergrad) and for grad school.</p>
<p>Or, if you get significant merit-based aid somewhere, let you uncle just sit on that account and save it for grad school.</p>
<p>On the other hand, if you do that, but then plans change (as they often do) and you don’t end up going to med school or some other expensive post-grad option, then you would have racked up a bunch of undergrad debt and not really be able to use all the money your uncle has accumulated in the 529.</p>
<p>Remember, 529 funds must be spent in the calendar year that the expense occurs. that is to say, you can not take out student loans for three years and then in your fourth year take that money out of the 529 and pay them off.</p>
<p>It’s a bit complicated. In certain ways, for low-income students, non-parent owned 529s can be a mixed blessing.</p>
<p>Any chance your uncle could give ownership of the account to your mother? If she’s the owner of the account it won’t be counted as untaxed income to you, and will instead be counted as a parent asset. Parent assets are treated much more favorably in the FAFSA formula than student income: 5.6% vs. 50%.</p>
<p>In fact, with your mother’s low-income, her assets would likely not be considered at all.</p>