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

FAFSA Worksheet

Now that everyone is excited about the FAFSA, it’s nowhere to be found. Not last year’s, not this year’s. If you want a head start on collecting info, here is last year’s FAFSA Worksheet. Swap 2017 for 2016 and 2018 for 2017 and you’ll see exactly what documents and other information are needed.

And of course, the concrete step you can take today to prepare for the FAFSA is to get an FSA ID. Parents and students each need one. For married parents, only one parent needs to create an FSA ID.

Long Term Student Loan Default Rates

Schools are required to publish a Cohort Default Rate (CDR), a useful but limited statistic showing the default rate of student loan borrowers from that school. Why is it limited? Because data is limited to federal loan programs and to students within three years of graduation. That tends to omit two groups of students with a higher-than-average likelihood of defaulting: students who are in forbearance programs– not making any payments due to financial hardship– and private loan borrowers. Fortunately, TICAS provides a broader look at student debt. Continue reading Long Term Student Loan Default Rates

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