How to Report 529 College Savings Plan on FAFSA

Families use many different financial instruments to save for college. From the time the child is born, or in some cases even before, parents, grandparents, and other family members put money aside to help pay for the future cost of college. One of the most popular strategies is to use a 529 College Savings Plan. Let’s take a look at 529 college savings plans and how it should be reported on the FAFSA.

529 College Savings Plan

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What is a 529 College Savings Plan?

A 529 plan is a type of savings plan designed to encourage families to save for future higher education expenses. Named after Section 529 of the Internal Revenue Code, these plans are run by states or educational institutions, and are specifically created to help families set aside funds for college. The funds in a 529 plan grow tax-free, and withdrawals for qualified educational expenses are also tax-free.

How to Report 529 College Savings Plan of FAFSA

The FAFSA requires financial information from the custodial parent(s) and the student. Most 529 College Savings Plans are in the name of the parent as the custodian with the student as the beneficiary. In the case of 529 College Savings Plans in the name of the custodial parent(s), they should be reported as a parent investment on the FAFSA.

529 College Savings Plans can also be created under the names of non-custodial parents, grandparents, and other family members. In those cases, the 529 College Savings Plan total doesn’t need to be reported as a parent investment on the FAFSA.

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