CLARION, Pa. (EYT) — Michael Patton, of Patton Financial Advising, submitted the following article: Grandparent 529 Plans Get a Boost Under New FAFSA Rules.
529 plans are a favored way to save for college due to the tax benefits and other advantages they offer when funds are used to pay a beneficiary’s qualified college expenses. Up until now, the FAFSA (Free Application for Federal Student Aid) treated grandparent-owned 529 plans more harshly than parent-owned 529 plans. This will change thanks to the FAFSA Simplification Act that was enacted in December 2020. The new law streamlines the FAFSA and makes changes to the formula that’s used to calculate financial aid eligibility.
Current FAFSA Rules
Under current rules, parent-owned 529 plans are listed on the FAFSA as a parent asset. Parent assets are counted at a rate of 5.64%, which means that 5.64% of the value of the 529 account is deemed available to pay for college. Later, when distributions are made to pay college expenses, the funds aren’t counted at all; the FAFSA ignores distributions from a parent-owned 529 plan.
Read the full article here: https://www.pattonadvising.com/Grandparent-529-Plans-Get-a-Boost-Under-New-FAFSA-Rules.c9785.htm
Patton Financial Advising
51 N. 4th Avenue
Clarion, PA 16214
814-226-9400
Toll-free 1-877-547-2751
Visit website: www.pattonadvising.com
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