529 College Savings

529 would go into the category of investments, so yes, if you’ve saved a good amount of money in a 529, it will reduce your aid. I am not sure how much it’ll reduce by, though (I think it depends on a case by case scenario). To know your best estimates and such, I would use the financial aid calculators that each college has!

It depends on who owns the 529. If it is in one of your parents names, then 5.64% of the total balance (if your parents have multiple children each with a 529, the government makes them sum the total and hold this against the child in college) counts against you. Interestingly enough, if the 529 is owned by a grandparent or uncle, it does not count against the kid in college. Therefore, if possible, transfer the ownership outside the immediate family where it is not counted at all.

Now, they recently changed the rules where if a grandparent paid your tuition out of the 529 that it counted as student income. That is no longer the case, so having the 529 owned outside the family can save EFC dollars.

If you are trying to decrease your EFC, moving 529 dollars may help. Also, having your parents hold any assets that are yours will help as well as 30% of your net worth counts toward the EFC (down from 50% recently). Finally, having your parents prepay as many debts/bills as possible to decrease their cash on hand when FAFSA is submitted is the last "trick" I could recommend. At the end of the day, most of the EFC is your parents' earned income, so even these "tricks" may have limited impact if your parents are high income earners. They have much more impact on middle and low incomes.

Hope that helps!