529 Savings Plan - Parents Asset


V

Vic

If a person who dosn't have any children, starts funding a 529 savings
plan for his nephew and then later some day has his own child. But
still he doesn't change the beneficiary and keeps the 529 money in the
name of the original beneficiary. Now my question is when time comes
for his own child to go to school, how will his assets in that 529
plan for his nephew affect the financial aid for his own kid. Will the
assets still be counted as 5.6% for financial aid calculations just
because assets are essentialy parent's assets irrespective of the fact
that his own child is not the beneficiary.
 
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T

Tad Borek

Vic said:
If a person who dosn't have any children, starts funding a 529 savings
plan for his nephew and then later some day has his own child. But
still he doesn't change the beneficiary and keeps the 529 money in the
name of the original beneficiary. Now my question is when time comes
for his own child to go to school, how will his assets in that 529
plan for his nephew affect the financial aid for his own kid. Will the
assets still be counted as 5.6% for financial aid calculations just
because assets are essentialy parent's assets irrespective of the fact
that his own child is not the beneficiary.
I'm not sure anyone could answer that definitively right now - how 529s
are factored into financial aid could very well change as the plans
become more popular. Even right now I believe there's some
inconsistencies from one aid program to the next. For 18+ years from
now...who can say?

-Tad
 
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Z

zak

Right, it's hard to answer that question for 18+ years but if we
evaluate both aspects of the scenario, I see a problem for both
answers.

If answers is YES then a child doesn't get financial aid because of
his parents mistakes. Neither parents nor school are assisting him
financially in this case.

If answers is NO then two families can fund each other's kid's
education thru 529 keeping following exactly the same style and
amount. In this case their kids would qualify for the aid because
their parents assets won't be counted.
I believe that the likely scenario would be that the assets would be
counted toward their own available assets under the standard rules,
but the parents could appeal the decision on the basis that their
child is not the beneficiary. How much aid to give would be at the
discretion of the loan officer. If I were a loan officer, I would be
rather skeptical of the claim that "Well I have all this money saved
for college, but not this child's college."

I also believe that a lot of the more abusive loopholes will be closed
in the next 18 years.
 

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