Savannah financial advisor answers your college savings accounts questions
Savannah financial advisor Marsha Woelber
Savannah financial advisor Marsha Woelber knows money. Which is why we love her frequent guest posts on SouthernMamas about becoming financially savvy. To read her previous posts, click here.
Marsha Woelber will respond to your financial questions. Email/call with your questions: Marsha Woelber; marsha@iissav.com, 912-650-2852. Here’s a recent question she received from a SouthernMamas reader: How do college savings accounts impact financial aid eligibility?
Below Marsha Woelber’s response:
The Free Application for Federal Student Aid (FAFSA) is the form used by the U.S. Department of Education to determine eligibility for federal, state, and college-sponsored financial aid, including grants, work-study, and loans. The Department of Education conducts an analysis based on financial information, such as income, assets and other household information.
It is important to know the implications of your children’s savings accounts on any financial aid they may need in the future.
Need-based financial aid depends on whether an asset is owned by the student or the parent. College savings plans such as a 529 plan are reported on the FAFSA as an asset of the account owner (usually the child is the beneficiary, not the owner). When the parent is the account owner, these plans have a low impact on financial aid eligibility. If the 529 is owned by a third party (ex: a grandparent), it is not reported on the FAFSA at all.
If you’ve saved money for your child using a traditional custodial UGMA or UTMA, you may want to consider rolling the money over into the custodial version of a 529 college savings plan. For financial aid purposes, custodial accounts (UGMA/UTMA) are considered assets of the student. This means that custodial bank and brokerage accounts have a high impact on financial aid eligibility.
*This answer addresses federal, state and college-sponsored financial aid only; private loans or scholarships will have different guidelines.
Marsha Woelber is a Partner at Independent Investment Services, LLC/Securities Offered through LPL Financial, Member FINRA/SIPC. She can be reached @ marsha@iissav.com or 912-650-2852.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.