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Does a 529 Plan impact financial aid eligibility?

Any non-retirement investment or savings account may affect your eligibility for financial aid. A portion of your Prepaid and Savings Plan value will be considered when calculating the Expected Family Contribution (or EFC) on the Free Application for Federal Student Aid (or FAFSA). When calculating the student’s EFC, up to 5.64% of parental assets are counted. This is quite favorable compared to other student assets, which are counted at 20%.

If the plan is owned by someone other than a parent or the student, withdrawals from a plan are reported as student income in the following year for EFC purposes. Generally speaking, a higher EFC will lower financial aid eligibility.

For more information, please consult or an educational financial aid adviser.

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