Will a 529 affect my child's eligibility for financial aid?

It depends. Under the federal formula, if the parent owns the account (for the benefit of the student or anyone else), the account is treated as a parental asset—the same way as money in the bank—so the impact is minimal. If the student owns the account (and the student is considered a dependent student for aid purposes), the value of any "custodial 529 plan" currently does not need to be reported on the federal aid form known as the FAFSA. However, since many in the financial aid community expects Congress will soon close that loophole, families should avoid setting up such custodial 529s until that issue is resolved.

Want to read our answers to more of your questions? Check out our Q&A archives at the top of this page—click here.