|How will my 529 account be treated for financial aid purposes?|
The federal government treats 529 plans (college savings plans and prepaid tuition plans) as an asset of the parent, if the parent is the account owner (so accounts owned by grandparents or friends don't count at all). Under the federal financial aid formula, parent assets are assessed at a rate of 5.6 percent. Any distributions (withdrawals) from a 529 plan that are used to pay the beneficiary's qualified education expenses are not counted as either parent or student income.
Colleges typically treat 529 plans the same way when distributing their own institutional aid. However, colleges might differ in their treatment of plan withdrawals. Contact the financial aid administrator at each individual college for more information.