What factors affect eligibility for financial aid and other forms of assistance? Happy morning everyone and welcome back to Finance Friday. In Today’s agenda, we answer The Question of the Week. Today’s question comes from D.A.:
“I heard that if I have a 529 Plan for my child, they will not be able to receive financial aid. Is that true?”
Some people fear that having a 529 Plan may reduce how much aid a school offers. The key regarding Financial Aid eligibility is who owns the 529 Plan. Here are 3 examples of 529 Plan ownership and how they affect Financial Aid:
Student – If the Plan is owned by the student, then their financial aid eligibility can be reduced by up to 20% of their 529 value. This happens because the plan is considered an asset for the student.
Parent – If the plan is owned by the student’s parents, their financial aid eligibility can be reduced to 5.6% of the 529 value at a maximum. This occurs because the plan is owned by the parents, not the student.
3rd party or grandparent – If the plan is owned by the grandparents or another 3rd party, then there is no reduction to financial aid.
Remember, for 529 Plans to have the maximum financial aid eligibility, the students cannot own the plan, they must only be the beneficiary of the plan.
Remember to submit your questions and thoughts on our discussion to hector@hrcfin.com. Don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday Tips and Insights.
Thank you again everybody. We are off next week in observance of the 4th of July weekend but we’ll be back the following week with an update on the economy and the markets.