Q:Does a 529 plan affect financial aid?

Watch video.A:Does a 529 college savings plan affect financial aid?Yes†¦ but not as much as you might think. Most schools use the FASFA form to determine your Expected Family Contribution, or, EFC.Savings in a 529 plan = parental assets on the FAFSA.Why is that good?Parental assets are treated favorably compared to student assets.†¢ Percent of assets reported on the FAFSA:Parental – 5.64% (maximum)†¢ Student – 20%Here’s an example:Dana’s parents have $30,000 saved in a 529 plan. How Dana’s college savings affect financial aid- The 529 plan only increased Dana’s EFC by a maximum of $1,692.A lower EFC means more financial aid eligibility.And it gets better†¦Qualified withdrawals from a 529 plan aren’t counted on the FAFSA as long as a dependent student or their parent owns the account. And Coverdell ESAs enjoy the same treatment, too. So, Save Away!