What if 529s are Not What Wall St. Hypes Them to Be?
What if a 529 Plan Reduced Financial Aid by MORE than it Grew in Value?
At left now is a photo of the Calculator's data entry page, with a $50,000 529 Plan asset included at the bottom. 529 Plan balances are considered a Parent Asset on the FAFSA. All other information about this family is the same. How does the 529 Plan balance affect financial aid?
Below this paragraph is a Results screenshot showing this family's EFC has risen to $16,088, a $2,572 reduction in aid eligibility. How does this affect the cost of college? The family could likely expect a smaller financial aid award - on the order of $22,511.
This is calculated as follows (contact us for details):
$40,000 Price - $16,088 EFC = $23,912 Need x 85% Need Met = $20,325 Financial Aid Award Package.
The $50,000 529 Plan lost this family $2,185 per year in aid (x 4 years = $8,743 in total). $2,185 divided by the 529 Plan balance of $50,000 equals 4.37% in lost financial aid. This is virtually certain to happen. Is the 529 Plan certain to earn 4.37% or more, just to break even? Can your family afford that risk (what if the balance declines 34% in 1 year)?
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