Quick Tips About 529 Plan Financial Aid | American Funds

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July 14, 2014

Quick Tips About 529 Plan Financial Aid

Whether a parent or someone else owns a 529 plan, there are important details to know about how it affects college financing.

  • A 529 Plan Owned by a Parent or Student
    If the student is dependent, the 529 plan is considered an asset of the parent. If the student is independent, then the 529 Plan is considered an asset of the student. When applying for the Free Application for Federal Student Aid (FAFSA), distributions are not considered income to the parent or student.
  • A 529 Plan Owned by Someone Else
    According to FAFSA, if someone other than a parent or student owns the 529 plan, the funds are not considered to be the student or the parent’s asset. In this case, the owner of the 529 plan should talk to a qualified tax advisor about their situation.

You can learn more about 529 plans at the Service Center, or download Understanding the effects of income and savings on financial aid (PDF).

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries. 

This material is intended for use by financial professionals or in conjunction with the advice of a financial professional.