529 College Savings Plans
Updated: Jan 15, 2022
One of the things I love about the Face Your Finances webinars is that I have an opportunity to really talk to people about their individual goals. Personal finance is - well, personal. One size can't fit all because our individual situations are different. But that's the beauty of the Empower Finance community - we can talk through it and learn together. We tackled 529 college savings plans in one of the webinars...
First - I highly recommend 529 college savings plans are an awesome vehicle for college savings. I could go on and on about why they are so phenomenal, but for now, know that 529s are a good thing.
However - who owns the 529 plan matters. If a parent owns the 529 plan on behalf of the child, then the 529 will be counted as an when filling out the FASFA (application for financial aid). This may affect the amount of financial aid available to the student. However, withdrawals are not counted as income when filling out the FASFA (application for financial aid).
If a grandparent owns the 529 plan on behalf of the student, then the 529 plan will not be counted as an asset when applying for financial aid. However, when funds are withdrawn, they will count as income on the FASFA in the following year.
So...now you’re wondering - who should own the 529 - Grandparents or parents? As with anything related to finance, it depends. It depends on how much other savings you may have, when you may need the funds and the financial condition of the parents vs. the grandparents. The main point here is that if you’re interested in saving for college for anyone, you should know that there are options and different ways to structure your savings plan. Whatever you do, however you do it - start now!
We'd love for you to be a part of the Empower community! Join ourFacebook group for free personal finance tips or check out the Face Your Financeswebinarsfor a little more guidance. We're enrolling for November right now! If you're interested, sign up at finances.empowermentsource.org or click the link in bio. See you soon!
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