529 plans and financial aid
Which arrangement is less likely to result in a cut in financial aid: a parent or a grandparent 529 plan?
Terry Says
Under the current law, the grandparent account is not disclosed as a student asset UNTIL money is taken out! Then for the next year’s aid, the amount of that withdrawal is treated as a student asset –and has more severe impact on financial aid. So the idea would be to save that money for the LAST year of college — so it wouldn’t impact aid for the following year!
Of course tax laws could change. But having a custodial account in a parent’s name weighs far less heavily against the family in the aid formula than money in a student’s name.
