529 college savings over-funded - how to proceed?

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Elemental
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529 college savings over-funded - how to proceed?

Post by Elemental » Tue Apr 23, 2019 1:31 pm

My parents have a 529 plan for each of their grand children, of which there are many. My oldest kiddo is a Junior in high school and looking at college now. I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. As a result, her fund has a lot more money than some of the other funds for the other grandkids. My father intends to keep all of the 529s to roughly the same amount so it's fair for the grandkids, which makes sense to me.

Here are the questions. Assuming we can we re-distribute funds from one 529 to another, when does the re-distribution of funds need to be completed in order to not count against my daughter as assets that would impact the FAFSA or other calculations for college aid and scholarship programs? I have my own 529 plans for my kids (not a lot of money, but enough for a year or two of local college). Should I deplete my 529 for my daughter prior to depleting my parent's 529 for her? I've heard that there is a difference in how those are counted for FAFSA (parent vs. grandparent), but I'm confused. Thanks for your insights.

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 1:43 pm

Elemental wrote:
Tue Apr 23, 2019 1:31 pm
My parents have a 529 plan for each of their grand children, of which there are many. My oldest kiddo is a Junior in high school and looking at college now. I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. As a result, her fund has a lot more money than some of the other funds for the other grandkids. My father intends to keep all of the 529s to roughly the same amount so it's fair for the grandkids, which makes sense to me.

Here are the questions. Assuming we can we re-distribute funds from one 529 to another, when does the re-distribution of funds need to be completed in order to not count against my daughter as assets that would impact the FAFSA or other calculations for college aid and scholarship programs? I have my own 529 plans for my kids (not a lot of money, but enough for a year or two of local college). Should I deplete my 529 for my daughter prior to depleting my parent's 529 for her? I've heard that there is a difference in how those are counted for FAFSA (parent vs. grandparent), but I'm confused. Thanks for your insights.
I'm a little confused by the story, because I thought that all funds offered by 529 were generally index funds or bonds or stable value funds. I didn't think that company-specific funds were ever included in the mix. But I don't know every 529 fund and that's besides the point.

I also don't understand how you have an overfunded 529 but are looking for financial aid to help pay for college.

Is your daugther going to receive need based scholarships/grants or loans?

Skiandswim
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Re: 529 college savings over-funded - how to proceed?

Post by Skiandswim » Tue Apr 23, 2019 1:59 pm

Assuming your child will be applying for financial aid, it is often best to have the 529 Plan owned by a parent versus a grandparent. Aid is reduced by up to 5.64% of parents 529 Plan assets. Grandparent 529 Plan assets are not included in the initial FAFSA calculations, but any distribution to pay for eduction will count as income for the student and reduce aid much higher than the 5.64%. So you might not have to be concerned about the 529 Plan balance and instead work on how payment from the grandparent plan is made. There are some strategies to avoid aid reduction based on grandparent 529 Plans .... one such article: https://www.savingforcollege.com/articl ... -529-plans

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 2:13 pm

Of course 529s should count against FAFSA. Need based financial aid is intended for those who cannot pay for college otherwise, and only provides the amount needed to make up the shortfall. A 529 account, which is money dedicated to paying for college, should be included in the calculations to determine the amount of shortfall.

NotWhoYouThink
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Re: 529 college savings over-funded - how to proceed?

Post by NotWhoYouThink » Tue Apr 23, 2019 2:19 pm

First, my standard disclaimer that you/your student are very unlikely to get need-based financial aid no matter what assets you have. There just isn't much aid out there to be had, and the schools that offer significant aid are highly selective. But you might get some, so here goes.


A grandparent-owned 529 will not turn up on FAFSA at all, and will not affect your FAFSA EFC. (Repeating disclaimer that your EFC has little to do with what you pay for college.)

A grandparent-owned 529 will have to be reported on the CSS Profile, which is an additional, much more detailed financial disclosure document required by the more highly selective schools that actually have some money to hand out. No one can tell you how the grandparent-owned 529 will affect the calculations of any particular school, because that is a closely held secret and they don't have to tell you. Maybe a little, or not at all, or a lot, depending on the school

Payments from the grandparents, whether from a 529 or other source, are counted by FAFSA as well as CSS. That is why you hear that the grandparent-owned 529 shouldn't be used until the student's junior year, after all the data from the last FAFSA has been submitted. Those payments are treated, as they should be, like student income, and the calculations assume all/most of those payments will be available to pay for college. Makes sense, that is in fact what they are for.

So if you are going to move money out of the 529 for which your oldest child is the beneficiary, do it before that child starts applying to colleges, which would probably be fall of the senior year of high school.

Also, for detailed college financing/financial aid info with input from some volunteer experts, go to collegeconfidential.com financial aid forum.

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 2:32 pm

But here's the crux of grandparents funding the junior or senior year: There may not be a junior or senior year.

Something like 1/3 to 1/2 of college entrants as freshman do not graduate.

If the student only completes a year or two, wouldn't it be better for the grandparent to pay for those years, and the parent keeps the 529 for themselves after years 3 and 4 don't materialize?

SC Anteater
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Re: 529 college savings over-funded - how to proceed?

Post by SC Anteater » Tue Apr 23, 2019 2:36 pm

FAFSA lookback is 2 years (i.e for my kids, starting college in 2018, FAFSA asked for info from my 2016 tax returns), so I think your opportunity for her freshman year has already passed. But you fill out a FAFSA every year so the sooner you do it the better.

alamo
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Re: 529 college savings over-funded - how to proceed?

Post by alamo » Tue Apr 23, 2019 2:48 pm

Elemental wrote:
Tue Apr 23, 2019 1:31 pm
My parents have a 529 plan for each of their grand children, of which there are many. My oldest kiddo is a Junior in high school and looking at college now. I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. As a result, her fund has a lot more money than some of the other funds for the other grandkids. My father intends to keep all of the 529s to roughly the same amount so it's fair for the grandkids, which makes sense to me.

Here are the questions. Assuming we can we re-distribute funds from one 529 to another, when does the re-distribution of funds need to be completed in order to not count against my daughter as assets that would impact the FAFSA or other calculations for college aid and scholarship programs? I have my own 529 plans for my kids (not a lot of money, but enough for a year or two of local college). Should I deplete my 529 for my daughter prior to depleting my parent's 529 for her? I've heard that there is a difference in how those are counted for FAFSA (parent vs. grandparent), but I'm confused. Thanks for your insights.
For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.

Regarding the redistribution of funds due to the unequal amounts in the 529, it will probably be a bit tricky. The funds/investments would most likely stay in the same 529 but the beneficiary on that 529 is what would change. For example, if its determined that each kid gets $50k, then once $50k is disbursed from this particular 529, your grandparents can change the beneficiary to another grandkid, and so on.

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 2:52 pm

alamo wrote:
Tue Apr 23, 2019 2:48 pm
Elemental wrote:
Tue Apr 23, 2019 1:31 pm
My parents have a 529 plan for each of their grand children, of which there are many. My oldest kiddo is a Junior in high school and looking at college now. I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. As a result, her fund has a lot more money than some of the other funds for the other grandkids. My father intends to keep all of the 529s to roughly the same amount so it's fair for the grandkids, which makes sense to me.

Here are the questions. Assuming we can we re-distribute funds from one 529 to another, when does the re-distribution of funds need to be completed in order to not count against my daughter as assets that would impact the FAFSA or other calculations for college aid and scholarship programs? I have my own 529 plans for my kids (not a lot of money, but enough for a year or two of local college). Should I deplete my 529 for my daughter prior to depleting my parent's 529 for her? I've heard that there is a difference in how those are counted for FAFSA (parent vs. grandparent), but I'm confused. Thanks for your insights.
For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
However, if the student is applying for merit aid, why does it matter what the EFC number is? If the school is distributing scholarships based on EFC, it's need based aid. If they are distributing money without regard to EFC, it's merit based aid. But then it doesn't matter what the EFC is.

I actually never filled one out for my college. Father didn't want anyone to know the EFC number so it wasn't filled out. School never asked for it.

alamo
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Re: 529 college savings over-funded - how to proceed?

Post by alamo » Tue Apr 23, 2019 2:56 pm

miamivice wrote:
Tue Apr 23, 2019 2:52 pm

However, if the student is applying for merit aid, why does it matter what the EFC number is? If the school is distributing scholarships based on EFC, it's need based aid. If they are distributing money without regard to EFC, it's merit based aid. But then it doesn't matter what the EFC is.

I actually never filled one out for my college. Father didn't want anyone to know the EFC number so it wasn't filled out. School never asked for it.
My guess is the financial aid office uses applications that process FA for their students. I would assume its just easier to know all students that are requesting financial aid of any type (merit or need based) submit a FAFSA. All universities will offer the DOE federal loans as well which the student has to accept or decline each semester.

NotWhoYouThink
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Re: 529 college savings over-funded - how to proceed?

Post by NotWhoYouThink » Tue Apr 23, 2019 3:06 pm

For those commenting and not aware, the student has to submit a FAFSA at most a few schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
but as another poster mentioned, the question wasn't whether to fill out FAFSA, but how the grandparent-owned 529 would be assessed.

livesoft
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Re: 529 college savings over-funded - how to proceed?

Post by livesoft » Tue Apr 23, 2019 3:13 pm

Elemental wrote:
Tue Apr 23, 2019 1:31 pm
....
I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. ....
As already mentioned this AAPL thing is interesting because
https://budgeting.thenest.com/can-buy-s ... 22863.html
You cannot purchase individual stocks as part of a 529 account.
I can see a UTMA or UGMA account or maybe a Coverdell or even grandfather's own account holding AAPL stock for the student, but I don't see a 529 plan holding AAPL shares for the student. As such, all ideas about 529 plans are probably not pertinent to this thread, right?
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HereToLearn
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Re: 529 college savings over-funded - how to proceed?

Post by HereToLearn » Tue Apr 23, 2019 3:23 pm

alamo wrote:
Tue Apr 23, 2019 2:48 pm
Elemental wrote:
Tue Apr 23, 2019 1:31 pm
My parents have a 529 plan for each of their grand children, of which there are many. My oldest kiddo is a Junior in high school and looking at college now. I spoke with my father about the funds in her 529. Apparently, each of my father's 529s are invested differently, and the fund for my daughter had been invested in AAPL for the last 17 years. As a result, her fund has a lot more money than some of the other funds for the other grandkids. My father intends to keep all of the 529s to roughly the same amount so it's fair for the grandkids, which makes sense to me.

Here are the questions. Assuming we can we re-distribute funds from one 529 to another, when does the re-distribution of funds need to be completed in order to not count against my daughter as assets that would impact the FAFSA or other calculations for college aid and scholarship programs? I have my own 529 plans for my kids (not a lot of money, but enough for a year or two of local college). Should I deplete my 529 for my daughter prior to depleting my parent's 529 for her? I've heard that there is a difference in how those are counted for FAFSA (parent vs. grandparent), but I'm confused. Thanks for your insights.
For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.

Regarding the redistribution of funds due to the unequal amounts in the 529, it will probably be a bit tricky. The funds/investments would most likely stay in the same 529 but the beneficiary on that 529 is what would change. For example, if its determined that each kid gets $50k, then once $50k is disbursed from this particular 529, your grandparents can change the beneficiary to another grandkid, and so on.
Can't the grandparents just transfer some of the money from one child's 529 to another's without changing the beneficiary? I know I did that with my children but perhaps the rules are different because they are my children?

Topic Author
Elemental
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Re: 529 college savings over-funded - how to proceed?

Post by Elemental » Tue Apr 23, 2019 3:42 pm

Thank you for all the great replies. I'm still processing what has been said so far. To clarify a little: essentially, the 529 is currently funded with more money than my father wants to go to my kid in order to be fair to the other siblings / cousins. I thought it was a 529, but I guess it could be an ESA. It is held with Schwab, if that helps. It is entirely in AAPL.

If the entire fund were entirely hers, I would not expect a lot of aid, federal or otherwise. However, the fund is only partially ear-marked for her, but has her name/SSN on the whole thing. That's what I'm worried about.

NotWhoYouThink
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Re: 529 college savings over-funded - how to proceed?

Post by NotWhoYouThink » Tue Apr 23, 2019 4:05 pm

Either way it won't affect FAFSA EFC, and how it is treated by colleges that use the CSS Profile is anyone's guess. But in general income gets reported for the "prior prior" year, such that your income from the calendar year that started when your student was a sophomore in high school is used to determine financial aid eligibility for freshman year of college. Assets, on the other hand, are reported as of the day the FAFSA or CSS is submitted, so usually fall of the senior year. The grandparent account would be counted, if at all, as of that date.

marcopolo
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Re: 529 college savings over-funded - how to proceed?

Post by marcopolo » Tue Apr 23, 2019 4:23 pm

alamo wrote:
Tue Apr 23, 2019 2:48 pm

For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
This is not true as far as i can tell. We never filled out FAFSA or any other financial disclosure information.
Both my kids got multiple merit scholarship offers, mostly from schools just below the academic profile of each kid.
I believe this is a common approach many schools take to attract a higher academic profile than their current students.
Once in a while you get shown the light, in the strangest of places if you look at it right.

HereToLearn
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Re: 529 college savings over-funded - how to proceed?

Post by HereToLearn » Tue Apr 23, 2019 5:32 pm

marcopolo wrote:
Tue Apr 23, 2019 4:23 pm
alamo wrote:
Tue Apr 23, 2019 2:48 pm

For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
This is not true as far as i can tell. We never filled out FAFSA or any other financial disclosure information.
Both my kids got multiple merit scholarship offers, mostly from schools just below the academic profile of each kid.
I believe this is a common approach many schools take to attract a higher academic profile than their current students.
Another parent who never completed FAFSA and both of my children were awarded merit from multiple colleges.

Topic Author
Elemental
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Re: 529 college savings over-funded - how to proceed?

Post by Elemental » Tue Apr 23, 2019 5:36 pm

I didn't know they look at prior prior years. If I understand correctly, for the "expected family contribution" they include the value of cash reserves, but not the value of a home. If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized vs. someone with no emergency fund and a huge house instead. Does that sound right?

NotWhoYouThink
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Re: 529 college savings over-funded - how to proceed?

Post by NotWhoYouThink » Tue Apr 23, 2019 5:44 pm

Elemental wrote:
Tue Apr 23, 2019 5:36 pm
I didn't know they look at prior prior years. If I understand correctly, for the "expected family contribution" they include the value of cash reserves, but not the value of a home. If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized better prepared to pay for college vs. someone with no emergency fund and a huge house instead. Does that sound right?
Because having a low EFC doesn't mean you are going to get any aid. It means you might be eligible for some if any were available, but most times little to none is.

alfaspider
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Re: 529 college savings over-funded - how to proceed?

Post by alfaspider » Tue Apr 23, 2019 6:41 pm

miamivice wrote:
Tue Apr 23, 2019 2:32 pm
But here's the crux of grandparents funding the junior or senior year: There may not be a junior or senior year.

Something like 1/3 to 1/2 of college entrants as freshman do not graduate.

If the student only completes a year or two, wouldn't it be better for the grandparent to pay for those years, and the parent keeps the 529 for themselves after years 3 and 4 don't materialize?
This is one of those situations where averages are probably not helpful.

A big portion of those dropouts occur for financial reasons- obviously not an issue here. Also, at selective colleges (as in, they actually reject at least some reasonable portion of applicants) the graduation rate is quite high. The majority of drop outs are at for-profit and community colleges. If the kid is at a college with a 95% graduation rate, it’s not reasonable to conclude there is still a 50% chance of dropping out.

SC Anteater
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Re: 529 college savings over-funded - how to proceed?

Post by SC Anteater » Tue Apr 23, 2019 7:00 pm

Elemental wrote:
Tue Apr 23, 2019 5:36 pm
I didn't know they look at prior prior years. If I understand correctly, for the "expected family contribution" they include the value of cash reserves, but not the value of a home. If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized vs. someone with no emergency fund and a huge house instead. Does that sound right?
For FAFSA, yes. For CSS (private schools) they ask for home value/equity and all the schools assess it a little differently, some don't count it at all, some count 20% of it, etc.

stoptothink
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Re: 529 college savings over-funded - how to proceed?

Post by stoptothink » Tue Apr 23, 2019 7:19 pm

HereToLearn wrote:
Tue Apr 23, 2019 5:32 pm
marcopolo wrote:
Tue Apr 23, 2019 4:23 pm
alamo wrote:
Tue Apr 23, 2019 2:48 pm

For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
This is not true as far as i can tell. We never filled out FAFSA or any other financial disclosure information.
Both my kids got multiple merit scholarship offers, mostly from schools just below the academic profile of each kid.
I believe this is a common approach many schools take to attract a higher academic profile than their current students.
Another parent who never completed FAFSA and both of my children were awarded merit from multiple colleges.
I personally never filled out a FAFSA (ever, for any of the 4 universities I attended) and got merit aid for undergrad. I think it depends on the institution.

renue74
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Re: 529 college savings over-funded - how to proceed?

Post by renue74 » Tue Apr 23, 2019 7:23 pm

You can transfer ownership...so they could just say, "Kid X, we will use $XXXXX for you and then transfer the account to Kid Y."

Or...heck, transfer it to themselves and go to Bologna, Italy for a 2 month "intensive immersive language course." Eat great food and drink great wine. :sharebeer

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 8:50 pm

Elemental wrote:
Tue Apr 23, 2019 5:36 pm
I didn't know they look at prior prior years. If I understand correctly, for the "expected family contribution" they include the value of cash reserves, but not the value of a home. If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized vs. someone with no emergency fund and a huge house instead. Does that sound right?
A person with a small home and large cash reserve is more able to pay for college than a person with a large home and small cash reserve.

Keep in mind, need based financial aid is intended to help those students whose families are unable to pay for college. Also keep in mind that most of it at the majority of colleges is in the form of subsidized loans rather than scholarships/grants.

SchruteB&B
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Re: 529 college savings over-funded - how to proceed?

Post by SchruteB&B » Tue Apr 23, 2019 8:54 pm

stoptothink wrote:
Tue Apr 23, 2019 7:19 pm
HereToLearn wrote:
Tue Apr 23, 2019 5:32 pm
marcopolo wrote:
Tue Apr 23, 2019 4:23 pm
alamo wrote:
Tue Apr 23, 2019 2:48 pm

For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
This is not true as far as i can tell. We never filled out FAFSA or any other financial disclosure information.
Both my kids got multiple merit scholarship offers, mostly from schools just below the academic profile of each kid.
I believe this is a common approach many schools take to attract a higher academic profile than their current students.
Another parent who never completed FAFSA and both of my children were awarded merit from multiple colleges.
I personally never filled out a FAFSA (ever, for any of the 4 universities I attended) and got merit aid for undergrad. I think it depends on the institution.
I have read the claim that you need FAFSA for merit at many schools here and on college confidential many times. I have only heard of two specific schools that do so. Our child’s experience was it was not required at any of the colleges that offered him merit.

miamivice
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Re: 529 college savings over-funded - how to proceed?

Post by miamivice » Tue Apr 23, 2019 8:58 pm

SchruteB&B wrote:
Tue Apr 23, 2019 8:54 pm
stoptothink wrote:
Tue Apr 23, 2019 7:19 pm
HereToLearn wrote:
Tue Apr 23, 2019 5:32 pm
marcopolo wrote:
Tue Apr 23, 2019 4:23 pm
alamo wrote:
Tue Apr 23, 2019 2:48 pm

For those commenting and not aware, the student has to submit a FAFSA at most schools to qualify for merit based aid as well. Even if the student doesnt qualify for need based aid due to high income or other assets the FAFSA is required.
This is not true as far as i can tell. We never filled out FAFSA or any other financial disclosure information.
Both my kids got multiple merit scholarship offers, mostly from schools just below the academic profile of each kid.
I believe this is a common approach many schools take to attract a higher academic profile than their current students.
Another parent who never completed FAFSA and both of my children were awarded merit from multiple colleges.
I personally never filled out a FAFSA (ever, for any of the 4 universities I attended) and got merit aid for undergrad. I think it depends on the institution.
I have read the claim that you need FAFSA for merit at many schools here and on college confidential many times. I have only heard of two specific schools that do so. Our child’s experience was it was not required at any of the colleges that offered him merit.
In my opinion, that claim is made on collegeconfidential by parents who received need based aid but are too proud to admit that they qualified, so they call it merit aid instead.

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scubadiver
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Re: 529 college savings over-funded - how to proceed?

Post by scubadiver » Tue Apr 23, 2019 9:08 pm

Elemental wrote:
Tue Apr 23, 2019 5:36 pm
If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized vs. someone with no emergency fund and a huge house instead. Does that sound right?
No, but it's correct that this is what happens.

ivk5
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Re: 529 college savings over-funded - how to proceed?

Post by ivk5 » Wed Apr 24, 2019 12:47 am

Elemental wrote:
Tue Apr 23, 2019 3:42 pm
I thought it was a 529, but I guess it could be an ESA.
Until you know, any advice here may be irrelevant or worse.

SimonJester
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Re: 529 college savings over-funded - how to proceed?

Post by SimonJester » Wed Apr 24, 2019 8:24 am

miamivice wrote:
Tue Apr 23, 2019 8:58 pm


In my opinion, that claim is made on collegeconfidential by parents who received need based aid but are too proud to admit that they qualified, so they call it merit aid instead.
My oldest son received a Merit based (GPA based) Scholarship to our in state public university. He was REQUIRED to complete the FAFSA in order to get said merit based Scholarship. Both oldest and youngest children when applying to various merit based Scholarships most if not all said they would require the FAFSA SAR report to me sent to them should they be chosen. Some even required you to upload their SAR report in the scholarship application...


Our EFC was 32K so I do not believe we would qualify as needs based aid...
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livesoft
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Re: 529 college savings over-funded - how to proceed?

Post by livesoft » Wed Apr 24, 2019 8:38 am

ivk5 wrote:
Wed Apr 24, 2019 12:47 am
Elemental wrote:
Tue Apr 23, 2019 3:42 pm
I thought it was a 529, but I guess it could be an ESA.
Until you know, any advice here may be irrelevant or worse.
If the AAPL shares are not in a 529 plan, then "sharing" becomes more problematic. For instance, if the shares are in a UTMA account, then who has filed the tax returns for her? If in an ESA, then I don't think shares can be transferred.

One thought would be that she gets the money from the AAPL shares and the 529 plan that YOU have for her gets some money transferred to another family member. That is, a double trade or quid pro quo to even things up.
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Re: 529 college savings over-funded - how to proceed?

Post by veggivet » Wed Apr 24, 2019 8:57 am

If the Apple shares are held within an ESA (Coverdell), they can be sold without incurring any capital gains taxes. Then the account can be transferred to the 529 account held in the daughter's name. Once there, those funds can be re-distributed in any proportion to other siblings, again without incurring any tax liabilities.

(OP needs to confirm what type of account the AAPL shares are held in. I don't believe they can be in any type of 529, so that leaves ESA as the most likely answer.)
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Re: 529 college savings over-funded - how to proceed?

Post by Grt2bOutdoors » Wed Apr 24, 2019 9:03 am

Elemental wrote:
Tue Apr 23, 2019 5:36 pm
I didn't know they look at prior prior years. If I understand correctly, for the "expected family contribution" they include the value of cash reserves, but not the value of a home. If that's true, then someone like me with a small home and a small mortgage and a large cash reserve would be penalized vs. someone with no emergency fund and a huge house instead. Does that sound right?
Penalized is an unusual choice of words. If you have the cash, they expect you to use it to pay for school costs after accounting for any grant/merit aid. If you don't have the cash and receive a loan instead, I would think a loan is a bigger burden unless that cash was part of your retirement plan or you need it to pay for ongoing health issues. It stinks, but if you have assets you will be expected to pay for college. It stinks worse, if you don't have assets, then you have to borrow and borrowing often brings longer term ramifications - less choice, less opportunity. I'd rather not have a loan.
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