A 529 plan is a state-operated investment plan that gives families a federal tax-free way to save money for college. 529 plans come in two varieties -- college savings plans and prepaid tuition plans. College savings plans let parents use their plan funds for college expenses at any college. Prepaid tuition plans effectively lock-in future tuition at present prices.
Undergraduate Financial Aid
529 Plans
Saving for College
Full details on 529 Plans can be found on the Saving for College website.
Prepaid Tuition Plan
Prepaid Tuition Plans are to be included on both the FAFSA and CSS Profile as a Parent Asset. However, rather than reducing aid dollar-for-dollar, the funds will be used to assess the Family Contribution in the same manner as a College Savings Plan. (See explanation below.)
College Savings Plan
The investment in a College Savings Plan must be reported as an asset in the name of the parent on the Free Application for Federal Student Aid (FAFSA) and CSS Profile. The student, as beneficiary, should not report the total of the investment as their asset. Because the beneficiary can be changed at any time, the investment is that of the parent. The College Savings Plan total will be added to the other investment totals reported and will be evaluated for purposes of calculating an Expected Family Contribution.