"Mike" <msgrinnell[at]charter.net> writes:

- quote -

The answer is - it depends. Most folks, when they say what
efffects things have on aid, are talking about the rules
laid out in the federal guidelines and by the FAFSA - the
federal gov't's unified financial aid application. Private
schools and private aid/scholarships can take things into
account that the FAFSA does not (ie. equity in your primary
home).

That said, the basic deal is that 529 balances are considered
assets of the parents (or owners), not the student. That's
a good thing. The downside is that distributions from a 529
may be treated as income for the student by the colleges.
If that's all the income the student has, this is probably
not a problem, but if he has other income, it may be.

- quote -

529s are considered assets of the parents. IRAs, Roth IRAs,
401k balances, equity in your primary residence, cash-value
life insurance and annuities are excluded by, at least, the
federal formulas. Definitely max out your retirement accounts,
both employer-sponsored and non-employer-sponsored (e. Roth).

Bear in mind that much aid these days is in the form of loans,
so shuffling assets to qualify for more of that form of aid
doesn't save you money so much as let you pay it back later
rather than sooner.

Oh, and that home-equity thing - more and more schools -
both public and private - are now counting home equity, too,
so don't necessarily be in a rush to pay off your house just
to move that capital off the balance sheet.


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Greetings,

My children are 6 and 3. Until recently when I upped my monthly
contribution to each of their 529 plans to $175 I was putting aside
$150 for each. Acquaintances have asked why I bother when
colleges/universities take the route of "what you have they'll take"
and anything I save will count against me when figuring financial
aid/grants. If it is possible to summarize, is my saving for my kids'
education helping or hurting? Also relevant is that I believe I am
saving adequately for retirement before putting aside for their 529s (I
put about 17% of my gross away for retirement at present).