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529 Form

(Updated February 9, 2024) - Families often wonder how 529 plans affect financial aid and how the two work together. The answer depends on a couple of key questions: who owns the plan and when withdrawals are taken. In most cases, your 529 plan will have a minimal effect on the amount of aid you receive and will actually end up helping you more than hurting you.

The value of a 529 plan owned by a student or a parent is considered a parental asset on the Free Application for Federal Student Aid (FAFSA). According to and, approximately the first $10,000 will fall under the Asset Protection Allowance (the exact amount depends on the parents’ age). Any parental assets beyond that amount will reduce a student’s aid package by a maximum of 5.64% of the asset’s value when determining the Student Aid Index (SAI). The SAI replaces the Expected Family Contribution (EFC) in 2024, and is a score that helps determine the student's financial need. A negative SAI indicates the student has a higher financial need. The FAFSA value to add to parental assets will be only that particular student's account value regardless of any sibling accounts. The financial aid formula assumes, at most, that your family will use 5.64% of parent investments for college costs (even though your family likely plans to use 100% of your college savings account to pay for college!). That’s good news for savers. For example, if your family has $25,000 in a 529 account, the financial aid office will assume only $1,400 is available to use for college costs (that’s only $1,400 you won’t receive in financial aid). Any amount you can save will be much more beneficial to you than the small amount you won’t receive in financial aid.

New in 2024, distributions from 529 plans owned by grandparents (or anyone else besides the student or the student's parents) will not be considered untaxed income on the FAFSA and aren't required to be reported.  However, parents and students should be aware that it may still considered on the CSS Profile. The CSS Profile is an additional financial aid form used by about 200 private colleges to award their institutional aid. The distributions count all 529 plans that list the student as a beneficiary, regardless of the named account owner. 

Saving and paying for college can be confusing and nerve-wracking but you have favorable options. Take advantage. It’s always a good idea to consult a financial advisor and/or your 529 plan’s customer service department before making any decisions. To learn more about your WA529 plan make sure to visit our Knowledge Cafe where we offer webinars complete with Q&A sessions at the end. For more info visit the WA529 Knowledge Cafe or Frequently Asked Questions section on this website.