College savings plans
I have Bright Start accounts for each of my 3 grandchildren but am wondering how such accounts may impact financial aid and if I should continue to make periodic contributions.
Terry Says
You should definitely continue to make contributions because all the money grows TAX FREE for college. And, if YOU (the grandparent) are the custodian it will have absolutely NO impact on financial aid, because it is not declared on FAFSA as a family asset.
BUT this money should be used for the last year of college, because if it is used to pay for the first three years, then the whole account will be considered a “student asset” and thus will impact financial aid in the remaining school years.
Parental custodian 529 accounts do have some small impact on financial aid, but not very much. Definitely a 529 is a parent’s best way to save for college.
