Latest news with #FAFSASimplificationAct
Yahoo
22-04-2025
- Business
- Yahoo
Does a 529 plan affect financial aid?
A 529 college savings plan can be a powerful tool when saving for future education expenses because investments in the plan can increase tax-free, but many savers don't take full advantage of all the benefits that 529 plans have to offer. One common deterrent to investing through a 529 plan is the concern that assets in a 529 account will reduce financial aid eligibility. While it's true that 529 assets have an impact on financial aid, the effect is likely smaller than you think. Do 529 plans affect financial aid? The short answer is yes. An increase in the means to fund higher education naturally means the beneficiary is eligible for less need-based aid. However, assets in a 529 plan have a lesser impact on financial aid packages than income does. A student's federal financial aid is based on an estimate of what a family can contribute annually from their income and assets. Income is the largest portion of this measurement of a student's ability to pay for college, which is represented by the Student Aid Index, or SAI, on the Free Application for Federal Student Aid, or FAFSA. The SAI replaced the expected family contribution, which was previously used on the application. Typically, the SAI calculation expects parents to use 25% to 35% of their adjusted available income to cover college costs, though that number can go as high as 47%. Parental contribution from assets, including 529 account balances, is assessed at a much lower maximum of 5.64%. So, if a family has a 529 account with $10,000, this raises the expected family contribution by at most $564 and reduces the federal aid package by the same amount. A 529 plan's impact depends on who owns the account The impact of 529 assets on a beneficiary's financial aid package depends on who owns the account. As outlined above, if the plan is owned by the beneficiary's parent, then 5.64% of the account's value is considered in the SAI, which determines a student's financial aid eligibility on the FAFSA. On the other hand, if the plan is owned by the student, then up to 20% of the account value may be considered in calculating financial aid eligibility. With changes to the federal student aid calculation as part of the FAFSA Simplification Act that took effect for the 2024-25 academic year, 529 accounts owned by grandparents or other relatives are not considered student assets and won't impact the beneficiary's financial aid. Siblings' 529 assets don't count for federal financial aid After the FAFSA Simplification Act, assets in 529 accounts are counted as parental assets only for the beneficiary of the account. That means, if you have 529 accounts set up for your other children, the assets in those accounts are no longer counted toward the expected family contribution. As mentioned above, accounts owned by grandparents or other relatives will also be excluded from determining federal financial aid eligibility. Financial aid eligibility differs between FAFSA and CSS profile There are also schools that use the College Scholarship Service, or CSS, Profile (primarily private schools) to calculate their financial aid packages. The CSS Profile's formula to calculate aid differs from FAFSA's. For instance, the CSS Profile asks for all 529 accounts owned by the beneficiary's parents, whereas the FAFSA only counts 529 accounts for which the student is the beneficiary. Moreover, the CSS Profile is customized by the institution, so each school can have its own formula to calculate its aid packages. While each school that uses CSS Profile information applies its own standards, this calculator estimates what your family might be expected to pay. ___ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to
Yahoo
22-04-2025
- Business
- Yahoo
Does a 529 plan affect financial aid?
A 529 college savings plan can be a powerful tool when saving for future education expenses because investments in the plan can increase tax-free, but many savers don't take full advantage of all the benefits that 529 plans have to offer. One common deterrent to investing through a 529 plan is the concern that assets in a 529 account will reduce financial aid eligibility. While it's true that 529 assets have an impact on financial aid, the effect is likely smaller than you think. Do 529 plans affect financial aid? The short answer is yes. An increase in the means to fund higher education naturally means the beneficiary is eligible for less need-based aid. However, assets in a 529 plan have a lesser impact on financial aid packages than income does. A student's federal financial aid is based on an estimate of what a family can contribute annually from their income and assets. Income is the largest portion of this measurement of a student's ability to pay for college, which is represented by the Student Aid Index, or SAI, on the Free Application for Federal Student Aid, or FAFSA. The SAI replaced the expected family contribution, which was previously used on the application. Typically, the SAI calculation expects parents to use 25% to 35% of their adjusted available income to cover college costs, though that number can go as high as 47%. Parental contribution from assets, including 529 account balances, is assessed at a much lower maximum of 5.64%. So, if a family has a 529 account with $10,000, this raises the expected family contribution by at most $564 and reduces the federal aid package by the same amount. A 529 plan's impact depends on who owns the account The impact of 529 assets on a beneficiary's financial aid package depends on who owns the account. As outlined above, if the plan is owned by the beneficiary's parent, then 5.64% of the account's value is considered in the SAI, which determines a student's financial aid eligibility on the FAFSA. On the other hand, if the plan is owned by the student, then up to 20% of the account value may be considered in calculating financial aid eligibility. With changes to the federal student aid calculation as part of the FAFSA Simplification Act that took effect for the 2024-25 academic year, 529 accounts owned by grandparents or other relatives are not considered student assets and won't impact the beneficiary's financial aid. Siblings' 529 assets don't count for federal financial aid After the FAFSA Simplification Act, assets in 529 accounts are counted as parental assets only for the beneficiary of the account. That means, if you have 529 accounts set up for your other children, the assets in those accounts are no longer counted toward the expected family contribution. As mentioned above, accounts owned by grandparents or other relatives will also be excluded from determining federal financial aid eligibility. Financial aid eligibility differs between FAFSA and CSS profile There are also schools that use the College Scholarship Service, or CSS, Profile (primarily private schools) to calculate their financial aid packages. The CSS Profile's formula to calculate aid differs from FAFSA's. For instance, the CSS Profile asks for all 529 accounts owned by the beneficiary's parents, whereas the FAFSA only counts 529 accounts for which the student is the beneficiary. Moreover, the CSS Profile is customized by the institution, so each school can have its own formula to calculate its aid packages. While each school that uses CSS Profile information applies its own standards, this calculator estimates what your family might be expected to pay. ___ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to
Associated Press
22-04-2025
- Business
- Associated Press
Does a 529 plan affect financial aid?
A 529 college savings plan can be a powerful tool when saving for future education expenses because investments in the plan can increase tax-free, but many savers don't take full advantage of all the benefits that 529 plans have to offer. One common deterrent to investing through a 529 plan is the concern that assets in a 529 account will reduce financial aid eligibility. While it's true that 529 assets have an impact on financial aid, the effect is likely smaller than you think. Do 529 plans affect financial aid? The short answer is yes. An increase in the means to fund higher education naturally means the beneficiary is eligible for less need-based aid. However, assets in a 529 plan have a lesser impact on financial aid packages than income does. A student's federal financial aid is based on an estimate of what a family can contribute annually from their income and assets. Income is the largest portion of this measurement of a student's ability to pay for college, which is represented by the Student Aid Index, or SAI, on the Free Application for Federal Student Aid, or FAFSA. The SAI replaced the expected family contribution, which was previously used on the application. Typically, the SAI calculation expects parents to use 25% to 35% of their adjusted available income to cover college costs, though that number can go as high as 47%. Parental contribution from assets, including 529 account balances, is assessed at a much lower maximum of 5.64%. So, if a family has a 529 account with $10,000, this raises the expected family contribution by at most $564 and reduces the federal aid package by the same amount. A 529 plan's impact depends on who owns the account The impact of 529 assets on a beneficiary's financial aid package depends on who owns the account. As outlined above, if the plan is owned by the beneficiary's parent, then 5.64% of the account's value is considered in the SAI, which determines a student's financial aid eligibility on the FAFSA. On the other hand, if the plan is owned by the student, then up to 20% of the account value may be considered in calculating financial aid eligibility. With changes to the federal student aid calculation as part of the FAFSA Simplification Act that took effect for the 2024-25 academic year, 529 accounts owned by grandparents or other relatives are not considered student assets and won't impact the beneficiary's financial aid. Siblings' 529 assets don't count for federal financial aid After the FAFSA Simplification Act, assets in 529 accounts are counted as parental assets only for the beneficiary of the account. That means, if you have 529 accounts set up for your other children, the assets in those accounts are no longer counted toward the expected family contribution. As mentioned above, accounts owned by grandparents or other relatives will also be excluded from determining federal financial aid eligibility. Financial aid eligibility differs between FAFSA and CSS profile There are also schools that use the College Scholarship Service, or CSS, Profile (primarily private schools) to calculate their financial aid packages. The CSS Profile's formula to calculate aid differs from FAFSA's. For instance, the CSS Profile asks for all 529 accounts owned by the beneficiary's parents, whereas the FAFSA only counts 529 accounts for which the student is the beneficiary. Moreover, the CSS Profile is customized by the institution, so each school can have its own formula to calculate its aid packages. While each school that uses CSS Profile information applies its own standards, this calculator estimates what your family might be expected to pay. ___ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to
The Independent
22-04-2025
- Business
- The Independent
Does a 529 plan affect financial aid?
A 529 college savings plan can be a powerful tool when saving for future education expenses because investments in the plan can increase tax-free, but many savers don't take full advantage of all the benefits that 529 plans have to offer. One common deterrent to investing through a 529 plan is the concern that assets in a 529 account will reduce financial aid eligibility. While it's true that 529 assets have an impact on financial aid, the effect is likely smaller than you think. Do 529 plans affect financial aid? The short answer is yes. An increase in the means to fund higher education naturally means the beneficiary is eligible for less need-based aid. However, assets in a 529 plan have a lesser impact on financial aid packages than income does. A student's federal financial aid is based on an estimate of what a family can contribute annually from their income and assets. Income is the largest portion of this measurement of a student's ability to pay for college, which is represented by the Student Aid Index, or SAI, on the Free Application for Federal Student Aid, or FAFSA. The SAI replaced the expected family contribution, which was previously used on the application. Typically, the SAI calculation expects parents to use 25% to 35% of their adjusted available income to cover college costs, though that number can go as high as 47%. Parental contribution from assets, including 529 account balances, is assessed at a much lower maximum of 5.64%. So, if a family has a 529 account with $10,000, this raises the expected family contribution by at most $564 and reduces the federal aid package by the same amount. A 529 plan's impact depends on who owns the account The impact of 529 assets on a beneficiary's financial aid package depends on who owns the account. As outlined above, if the plan is owned by the beneficiary's parent, then 5.64% of the account's value is considered in the SAI, which determines a student's financial aid eligibility on the FAFSA. On the other hand, if the plan is owned by the student, then up to 20% of the account value may be considered in calculating financial aid eligibility. With changes to the federal student aid calculation as part of the FAFSA Simplification Act that took effect for the 2024-25 academic year, 529 accounts owned by grandparents or other relatives are not considered student assets and won't impact the beneficiary's financial aid. Siblings' 529 assets don't count for federal financial aid After the FAFSA Simplification Act, assets in 529 accounts are counted as parental assets only for the beneficiary of the account. That means, if you have 529 accounts set up for your other children, the assets in those accounts are no longer counted toward the expected family contribution. As mentioned above, accounts owned by grandparents or other relatives will also be excluded from determining federal financial aid eligibility. Financial aid eligibility differs between FAFSA and CSS profile There are also schools that use the College Scholarship Service, or CSS, Profile (primarily private schools) to calculate their financial aid packages. The CSS Profile's formula to calculate aid differs from FAFSA's. For instance, the CSS Profile asks for all 529 accounts owned by the beneficiary's parents, whereas the FAFSA only counts 529 accounts for which the student is the beneficiary. Moreover, the CSS Profile is customized by the institution, so each school can have its own formula to calculate its aid packages. While each school that uses CSS Profile information applies its own standards, this calculator estimates what your family might be expected to pay. ___ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to
Yahoo
07-02-2025
- Business
- Yahoo
Heartland lawmakers seek to fix 'fundamental' roadblock for farm kids seeking student aid
Two bipartisan lawmakers from America's agricultural heartland are putting forth legislation that would amend the federal student aid provisions to help students in farming families receive the help they need to go to school. Sens. Joni Ernst, R-Iowa, and Michael Bennet, D-Colo., along with Rep. Tracey Mann, R-Kan., in the House, are forwarding the Family Farm and Small Business Exemption Act. As of late, the household contribution formula for the Free Application for Federal Student Aid (FAFSA) "fundamentally misunderstands" how farming families operate and how agricultural assets differ from the more liquid assets of other U.S. families. FAFSA is a form typically accessible to students on Oct. 1 of each year to allow for ample time to submit financial information in advance of both state and school-specific deadlines for aid eligibility. Doge Lawmaker Says Trump Already Racking Up Wins The bipartisan bill would exempt farms and small family businesses from considerations in the Higher Education Act of 1965 and therefore offer a more realistic calculus for students in rural areas seeking federal aid. Read On The Fox News App The new act would amend the FAFSA Simplification Act to restore the original exemption of all farmland, machinery, other operational materials and small businesses with fewer than 100 employees from being declared on the application. "No one should have to sell off the farm — or their small business — to afford college. As a farm kid myself, I know the enormous impacts grants and financial aid have on rural students' decision to go to college," Ernst told Fox News Digital. "I'm fighting for Iowa families, so unfair policies don't hold them back from investing in their child's education." In February 2024, Ernst, her Iowa counterpart Sen. Charles Grassley, and other Heartland and Deep South lawmakers like Sens. Cindy Hyde-Smith and Roger Wicker of Mississippi wrote to Biden Education Secretary Miguel Cardona about their concerns, which appeared to go largely unanswered. Doge Senator Seeks To Ensure Feds Can Continue Pursuing Covid Fraudsters, Debtors As Ig Sounds Alarm They alleged Question 22 of the FAFSA application asks for the net worth of a family's business operations, which the letter said wrongly analyzes how revenue streams for crops and livestock work — and how they can vary depending on the year. "[A]ssets cannot be cashed out to support a loan in the same capacity as traditional investments," the letter read. Therefore, Ernst on Thursday signaled she wants to adjust the qualification formula for FAFSA, so that America's agricultural families are able to have an equal shot at aid based on their conditions. Mann, who represents the seventh-largest congressional district in the nation that isn't an at-large seat, said he has innumerable farm families who are in need of clear, fair FAFSA policy. "Across Kansas' Big First and the country, net farm income has decreased by nearly 25% since 2022," Mann told Fox News Digital. "Between navigating record-levels of inflation and skyrocketing input costs, our family farmers, ranchers, agricultural producers and small business owners are doing their best to make an honest living. "When young people from these families are applying for higher education financial aid, the assets tied up in the family farm or the small business should not count against them. Congress should work to make life easier, not harder, for these dedicated families and students." Mann said he hopes the bill will even the playing field for students while "protecting the American dream for every student regardless of their parents' career ventures."Original article source: Heartland lawmakers seek to fix 'fundamental' roadblock for farm kids seeking student aid
