Introduction
The Free Application for Federal Student Aid (FAFSA) is a form that students must complete in order to apply for federal financial aid. One of the questions on the FAFSA asks students to report their assets. This can include money in savings accounts, checking accounts, and investments. It is important to note that not all assets must be reported on the FAFSA.
What is a 529 Plan?
A 529 plan is a tax-advantaged savings plan that can be used to save for college expenses. There are two main types of 529 plans: state-sponsored plans and private plans. State-sponsored plans typically offer lower fees and may provide state income tax deductions or credits for contributions. Private plans offer more investment options and may be more flexible than state-sponsored plans.
Do You Have to Report 529 on FAFSA?
The answer to this question is yes. Students must report the value of their 529 plan assets on the FAFSA. This includes the value of both the student’s own 529 plan and any 529 plans that are owned by their parents or other family members.
How to Report 529 on FAFSA
To report a 529 plan on the FAFSA, students must provide the following information:
- The name of the 529 plan provider
- The account number
- The value of the account as of the date the FAFSA is filed
Students can find this information on their 529 plan statement.
How Will Reporting a 529 Plan Affect My Financial Aid?
Reporting a 529 plan on the FAFSA will reduce the amount of financial aid that a student is eligible to receive. This is because the value of the 529 plan is considered an asset, and assets are used to determine a student’s financial need.
The amount of financial aid that a student will lose by reporting a 529 plan will depend on the value of the plan and the student’s other financial circumstances. However, it is important to note that even a small amount of money in a 529 plan can reduce a student’s financial aid.
Should I Avoid Having a 529 Plan if I Want to Qualify for Financial Aid?
No. 529 plans are a valuable savings tool that can help families save for college expenses. Even though reporting a 529 plan on the FAFSA will reduce the amount of financial aid that a student is eligible to receive, it is still worth it to have a 529 plan. This is because the tax benefits of a 529 plan can outweigh the reduction in financial aid.
Conclusion
Students must report the value of their 529 plan assets on the FAFSA. Reporting a 529 plan will reduce the amount of financial aid that a student is eligible to receive. However, it is still worth it to have a 529 plan because the tax benefits of a 529 plan can outweigh the reduction in financial aid.
Here are some common mistakes that students make when reporting 529 plans on the FAFSA:
- Not reporting the value of the 529 plan.
- Reporting the value of the 529 plan incorrectly.
- Reporting the value of the 529 plan in the wrong place on the FAFSA.
Additional Resources
Tables
| Table 1: State-Sponsored 529 Plans | Table 2: Private 529 Plans |
|---|---|
| Plan provider | Plan provider |
| Account number | Account number |
| Value of account | Value of account |
| Table 3: Assets Excluded from FAFSA | Table 4: Reduction in Financial Aid Due to Reporting 529 Plan |
|---|---|
| Asset | Reduction in Financial Aid |
| Home | 5-20% |
| Retirement accounts | 5-20% |
| Investments | 5-20% |
