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How does having a 529 account impact financial aid eligibility?

The treatment of account assets may have an adverse effect on a beneficiary’s eligibility to receive assistance under various federal, state, and institutional financial aid programs.

  1. In making decisions about eligibility for financial aid programs offered by the U.S. government and the amount of such aid required, the U.S. Department of Education takes into consideration a variety of factors, including among other things the assets owned by the student (i.e., the beneficiary) and the assets owned by the student’s parents. The U.S. Department of Education generally expects the student to spend a substantially larger portion of his or her own assets on educational expenses than the parents.
  2. For federal financial aid purposes, account assets will be considered (i) assets of a student’s parent, if the parent or a dependent student owns the account, or (ii) assets of the student, if the student is the owner of the account and is not a dependent student.
  3. For purposes of financial aid programs offered by states, other non-federal sources, and educational institutions, the treatment of account assets may follow or differ from the treatment described above for federal financial aid purposes. Account owners and beneficiaries are advised to consult a financial aid professional and/or the state or educational institution offering a particular financial aid program to determine how assets held in an account may affect eligibility for financial aid.
  4. Under Nevada law, assets in an account are not taken into consideration in determining the eligibility of the beneficiary, parent or guardian of the account for a grant, scholarship or work opportunity that is based on need and offered or administered by a state agency, except as otherwise required by the source of the funding of the grant, scholarship or work opportunity.

The federal and non-federal financial aid program treatments of assets in a 529 plan are subject to change at any time. You therefore should check and periodically monitor the applicable laws and other official guidance, as well as particular program and institutional rules and requirements, to determine the impact of 529 plan assets on eligibility under particular financial aid programs.

 

 

 

 

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