According to the Federal Student Aid Handbook, the value of a college savings plan should be treated as an asset of the owner, not the beneficiary. That value will be reported on the standard financial aid form, but only if the owner’s assets must be reported.
Moreover, distributions from 529 savings accounts will not be treated as the student’s income for financial aid purposes, if they’re spent on higher education, because such distributions are not included in adjusted gross income. Those distributions won’t be treated as untaxed income or as “resources” that reduce financial need.
Therefore, if someone other than a parent or guardian (an uncle, say, or a grandparent) is the account owner of a 529 savings account, it will not affect the student’s financial aid determination. Such ownership may make sense for families hoping for financial aid. You should be aware, though, that these rules govern federal financial aid; some states and individual schools may be take a closer look at assets in 529 accounts when awarding financial aid.
