Ask Terry Questions College savings

College savings

By Terry Savage on December 05, 2018 | College Savings / Student Loans

Hi Terry,
My mother in law opened a bright start account for my daughter. She is the manager of the account and my sister in law is the backup. Should we as the parents be the ones managing this account? Is this going to cause issues later when we are going to use the money in the account? My understanding is that only one account can be opened per child.

Terry Says

In one way, this is an advantage.  Since your mother-in-law “owns” the account, it does not have to be disclosed if you apply for financial aid.  However, if you withdraw from that account to pay for college it weighs much more heavily against you in the year after you use the money.  So you should save the money in that account for the last year of college.

You can have multiple accounts — with different owners.  So if  you wanted to start your own BrightStart account (, it would be considered a separate account.  You could even open a 529 at BrightStart in your own name, or for another child, since anyone in the same family can use the money for college!  Or you could open a 529 account at Vanguard or Fidelity, using their plans — but you wouldn’t get the tax deduction as you do for a BrightStart contribution.

As for “managing” — your mother-in-law likely chose the “age-based” plan — where they adjust the investments to become more conservative as the child reaches college.  So don’t argue with her.  Encourage her to keep saving for her grandchild!  And set up your own plan as well, because you can never have too much money for college.



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