Expert Quick Take
Associate VP Student Financial Services, Middlebury College
Can 529 savings impact financial aid eligibility?
They could – but the impact is minimal depending on who owns the 529 account.
When parents complete the FAFSA and CSS Profile for a dependent student, each 529 account (savings and prepaid tuition) is reported as a parent asset. When it comes to what’s available to pay for college, the FAFSA considers up to 5.6% (max) of parent assets, whereas 20% of student assets are considered. On the CSS Profile, it’s 5% and 25%, respectively.
When you fill out financial aid forms, make sure you report the value of 529 accounts for all children, not just the student applying to college. Accounts owned by other adults, like grandparents, are treated differently still.
If you’re wondering whether you should complete the FAFSA and CSS Profile, realize they are required forms when applying for several types of financial assistance. These include grants, federal work-study, and loans. If you plan on borrowing to meet college expenses, completing the FAFSA allows students access to federal student loans, which typically have favorable rates and repayment terms compared to many private student loan options. In addition to the FAFSA, hundreds of colleges and universities — mostly private — require the CSS Profile to be considered for institutional aid.