Answer provided: How will a 529 plan affect my child's chances to qualify for financial aid?

[Anonymous]

http://www.yale.edu/tuba/finaid/parents/the-529-plan.html

Scroll down to this header - How will a 529 plan affect my child's chances to qualify for financial aid?

It's not a direct hit on the aid calculation - a percentage of the total is figured.

I saw some information on the retirement thread re: 529s that was inconsistent with my previous research.

[Anonymous]

guess what, if you're middle class or more, you're not gonna get that much financial aid anyway. people have this misconception that a school or the gov't is going to pick up 50% or more of someone's tuition and that might be jeopardized if they actually save for college in a 529. Um, no.

If you have the average HHI income in this area or more, (say 100k) you are not going to qualify for aid packages, so you need to save. And most kids don't get academic or athletic scholarships unless the school is private anyway, in which case it's more expensive than what you'd pay at a state school anyway.

Just save people.

[Anonymous]

Agreed. I qualified for almost no financial aid when my dad didn't make a ton and my mom (who never worked) had recently passed away after leaving us with a ton of medical bills. The middle class is not necessarily eligible for much financial aid. We're saving for college, but also hoping that my daughter might get a merit scholarship, which is how I went to college. (full tuition paid, based on a 4.0+ GPA and killer SAT's.)

[Anonymous]

What are the rules with financial aid if for example a parent was to cut off a student in attempt to have the student get financial aid?

[Anonymous]

Anonymous wrote:What are the rules with financial aid if for example a parent was to cut off a student in attempt to have the student get financial aid?

It is virtually impossible to get yourself declared independent below a certain age (24 or 26 I think, though I'm not sure) unless you are married. I had friends withe divorced parents and their father refused to provide any support or any information for them to file a FAFSA. They were pretty much screwed.

[Anonymous]

Anonymous wrote:Agreed. I qualified for almost no financial aid when my dad didn't make a ton and my mom (who never worked) had recently passed away after leaving us with a ton of medical bills. The middle class is not necessarily eligible for much financial aid. We're saving for college, but also hoping that my daughter might get a merit scholarship, which is how I went to college. (full tuition paid, based on a 4.0+ GPA and killer SAT's.)

And what they are eligible for is mostly loans (subsidized if you're lucky). Even subsidized loans are still costly.

[Anonymous]

Anonymous wrote:guess what, if you're middle class or more, you're not gonna get that much financial aid anyway. people have this misconception that a school or the gov't is going to pick up 50% or more of someone's tuition and that might be jeopardized if they actually save for college in a 529. Um, no.

If you have the average HHI income in this area or more, (say 100k) you are not going to qualify for aid packages, so you need to save. And most kids don't get academic or athletic scholarships unless the school is private anyway, in which case it's more expensive than what you'd pay at a state school anyway.

Just save people.

And if you do get aid, it will likely be in the form of a subsidized loan. Sure it's better than an unsubsidized loan, but it's still a loan and expensive to pay off.


I was offered merit scholarships by 3 different state schools, so I don't think it's fair to say only private schools offer those type of scholarships though. Anyone accepted into the honors program at my state school got a partial tuition scholarship, and I think a lot of other state schools do something similar.

[Anonymous]

Anonymous wrote:guess what, if you're middle class or more, you're not gonna get that much financial aid anyway. people have this misconception that a school or the gov't is going to pick up 50% or more of someone's tuition and that might be jeopardized if they actually save for college in a 529. Um, no.

If you have the average HHI income in this area or more, (say 100k) you are not going to qualify for aid packages, so you need to save. And most kids don't get academic or athletic scholarships unless the school is private anyway, in which case it's more expensive than what you'd pay at a state school anyway.

Just save people.

It really depends on the school. I went to a small, highly ranked liberal arts college with a very large endowment. My parents made about 130k/year when I was in college. I paid about 7k/year total (including loan amounts I took out); the remaining 30k was covered by the school's grants. My brother was at a state school the same year and paid at least double what I paid - lower tuition, but no financial aid.

[Anonymous]

If you are earning above the cut-offs for federal aid, then the schools can do whatever they want and call it "merit aid."

How much does the school want you? that's the question.

529 balances don't count for the computation of Pell grants and federal student loan amounts. Pell is probably irrelevant if you are on this forum.

[Anonymous]

Anonymous wrote:guess what, if you're middle class or more, you're not gonna get that much financial aid anyway. people have this misconception that a school or the gov't is going to pick up 50% or more of someone's tuition and that might be jeopardized if they actually save for college in a 529. Um, no.

If you have the average HHI income in this area or more, (say 100k) you are not going to qualify for aid packages, so you need to save. And most kids don't get academic or athletic scholarships unless the school is private anyway, in which case it's more expensive than what you'd pay at a state school anyway.

Just save people.

I think you're a bit out-of-touch. There are a couple of other threads around here with folks wondering how they're going to pay off $2000 in credit card debt. What's there to save? Personally, I think the projections of growth in the cost of tuition are laughable. No way the cost of tuition is going to keep going up. In 18 years we may be looking at fully-subsidized college tuition. Or satellite campuses supplemented by internet tutoring. God only knows. But it ain't going to be "just like it is, plus the projected cost growth drawn with a straight-edge."

[Anonymous]

Anonymous wrote:

Anonymous wrote:guess what, if you're middle class or more, you're not gonna get that much financial aid anyway. people have this misconception that a school or the gov't is going to pick up 50% or more of someone's tuition and that might be jeopardized if they actually save for college in a 529. Um, no.

If you have the average HHI income in this area or more, (say 100k) you are not going to qualify for aid packages, so you need to save. And most kids don't get academic or athletic scholarships unless the school is private anyway, in which case it's more expensive than what you'd pay at a state school anyway.

Just save people.

I think you're a bit out-of-touch. There are a couple of other threads around here with folks wondering how they're going to pay off $2000 in credit card debt. What's there to save? Personally, I think the projections of growth in the cost of tuition are laughable. No way the cost of tuition is going to keep going up. In 18 years we may be looking at fully-subsidized college tuition. Or satellite campuses supplemented by internet tutoring. God only knows. But it ain't going to be "just like it is, plus the projected cost growth drawn with a straight-edge."

Not the PP you are responding to, but you are making a huge, risky leap in logic. I agree the increase can't keep up but it's not suddenly just going to be free. Supply and demand - there will always be people willing to invest in higher ed. It's not gonna just become free or dirt cheap. It's like housing. My house price has fallen since the peak in 2005 but you would still need about $485K to buy it.

[Anonymous]

Every college now has to post a net tuition calculator, where you can plug in various stats and see *about* what tuition might be given your HHI and other stats. That would give you an idea of today's cost, anyway.

[Anonymous]

This totally misses the point federal aid (Pell Grants) virtually no one here would qualify for so it's not an issue of how the Feds see a 529 - it's an issue of how a university treats it.

Example: university X tuition 50,000 per year
FAFSA for parents making 130K = $0 federal aid
However most colleges give some anyway $10,000

That $10,000 will be reduced by assets per the university policy. Generally it includes business assets, savings accounts (in any relatives name for the child), and outside merit scholarships.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What are the rules with financial aid if for example a parent was to cut off a student in attempt to have the student get financial aid?

It is virtually impossible to get yourself declared independent below a certain age (24 or 26 I think, though I'm not sure) unless you are married. I had friends withe divorced parents and their father refused to provide any support or any information for them to file a FAFSA. They were pretty much screwed.

This is why you need to start massive savings at birth. Prepaid tuition and 529s are protection against parents who divorce. If you get them to save early while they still think the kids are cute, then the money will be there. When there is divorce and an new wife/husband, you can FORGET it.

[Anonymous]

PP, most 529s allow the "owner" to change beneficiaries whenever they desire.