How will a 529 plan affect my child’s chances to qualify for financial aid?

The impact of a START account on financial aid will depend upon the circumstances of the beneficiary’s family at the time the beneficiary enrolls in school, as well as on the policies of the governmental agencies, school, or private organizations to which the beneficiary (and/or the beneficiary’s family) applies for financial assistance. Since saving for college will increase the financial resources available to the beneficiary, it could potentially have some effect on the beneficiary’s eligibility. However, these policies vary at different institutions and can change over time. For further guidance, you should consult with the financial aid office at the institution the beneficiary has selected.

Your START Savings account is treated as an asset of the parent or other account owner in determining eligibility for federal financial aid. Beginning with the 2009-2010 school year, Dependent Student-owned and UGMA/UTMA-owned 529 accounts are no longer excluded from the Free Application for Federal Student Aid (FAFSA) but are instead to be reported as parental assets. On the FAFSA, parental assets have a relatively small impact in calculating financial aid eligibility. In determining a student’s Expected Family Contribution (EFC), parental assets are currently assessed at a maximum 5.64% rate while non-529 plan assets are assessed at a rate of 20%. In addition, qualified withdrawals from an ESA are not counted as income in calculating a student’s financial aid eligibility.

The value of a START Saving Account has no impact on eligibility for a Taylor Opportunity Program for Students (TOPS) award.

An ESA may have a limited effect on eligibility for certain state-based financial aid programs. Eligibility for the Louisiana GO Grant is based on Pell Grant eligibility. The Leveraging Educational Assistance Partnership (LEAP) award, which is available to certain students with substantial financial need may be affected.