A 529 plan impacts financial aid as it is considered in the determination of whether you qualify for financial aid, and the amount of aid for which you qualify. Below we outline just how it affects the aid amount.
A 529 Plan Is Treated as a Parental Asset on the FAFSA
When filling out the FAFSA, be sure to have your 529 Plan information handy. Although the child may be the beneficiary of the 529 plan, if the parent is the owner of the account it is considered a parental asset, along with your non-retirement brokerage accounts as well as savings and checking, amongst others. As such, you must include it in the parental asset section of the FAFSA.
But it isn’t just that child’s 529 plan you must disclose. You must also list the 529 plans for any other of your children of which you are the owner. Yes, you read that correctly. All of the 529 plans that you own are considered parental assets and must be listed on the FAFSA. If you have multiple children, that asset amount can add up quickly! Let’s say you have four children and you own 529 accounts for each child, with each account holding $25,000. Your parental asset would be $100,000, not the $25,000 you may have been thinking when you went to fill out the financial aid form.