Category Archives: 529 Plans

College Prep by Grade

I gave a financial aid talk to college and career center volunteers at our high school recently. One question stood out: “This is a lot of information to absorb at once. Can you break it down into some specific suggestions by grade?” Two ideas are important here: College planning is a process that should start well before senior year, and there are things that can be done at any point to make things go more smoothly when the time comes to start applying. So here goes. Continue reading College Prep by Grade

529s and the FAFSA

529s are a source of a bit of confusion when it comes to filling out the FAFSA. Here are some common issues:

529s for multiple children: All of the parents’ 529s get reported on the FAFSA as parent assets. Let’s say you have 3 children, ages 17 (the one whose FAFSA you’re completing), 15, and 12, and you have a 529 account for each with balances of $12,000, $10,000 and $7,000. You would report $29,000 in 529 assets. Continue reading 529s and the FAFSA

UTMA to 529 Conversions

529s really started to gain popularity after 2001, when qualified distributions became tax-free. Up until then, UTMA accounts were a more popular option to save on behalf of a child, and they have remained widely used. However, as financial aid calculations and rules have become more codified, the UTMA has become far less beneficial as a college savings tool. That’s because an UTMA is treated as a student asset, meaning it gets no Continue reading UTMA to 529 Conversions

FAFSA Asset Do’s and Don’t’s

It’s the busy season for insurance and annuities hucksters who tell parents of college-bound students that spending their assets to buy an insurance policy will yield all manner of financial aid benefits. Before you start making expensive moves that end up costing more in the long run, you should figure out what will really benefit you. Continue reading FAFSA Asset Do’s and Don’t’s

What’s a Qualified Expense?

Qualified expenses (QHEE’s) are expenses that are eligible for some form of tax benefit such as the AOTC or a tax- and penalty-free distribution from a 529 account. Sounds simple, right? Let the fine print begin! Not all “qualified expenses” qualify for all purposes. And of course the most important rule of claiming education tax benefits: You can’t double-dip. That means that if you use 529 plan funds to pay an expense, you cannot also claim a tax credit for that expense. Continue reading What’s a Qualified Expense?

Feeling Guilty About College Savings?

If your college savings fund is generating negative emotions, you’re in good company: A recent survey by Student Loan Hero found that almost half of parents who are saving for their children’s college feel guilty about not saving enough. The survey also showed some rather worrying data: Continue reading Feeling Guilty About College Savings?