College Costs: Unexpected Stats about Saving (Part 3)

Posted In: Financial Planning Saving

Mistake 2: Limiting financial aid award potential

 

It is impossible to overstate the important of financial aid, when it comes to saving for college.

 

40 percent of families feel as though they’re paying too much for college as it is, and that is why pursuing financial aid is imperative. In fact, 33 percent of families used gift aid, scholarships, and other forms of financial aid to afford the 2018-19 school year.

 

Free Application for Federal Student Aid (FAFSA) determines eligibility for aid, and it is important that your college savings choices don’t impact the view FAFSA has of your financial situation – which can at times appear misleading.

 

529 savings plan have little effect on financial aid reception. Due to the fact that student assets are sometimes assessed more highly than parental assets, the 529 is particularly helpful, because they were opened in the name of the parent and the assets are considered the parents. So the impact on determined financial aid is often minimal, in this case.

 

Of course, every school may assess financial need differently, but one of the best ways you can begin making your savings strategies FAFSA friendly it to explore the possibility of a 529 savings plan for your child’s future higher education funds.

 

Source: Journal of Financial Planning, FPAJournal.org “6 Steps Students Should Take Before Choosing a School”  January 2020

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
Potential investors of 529 plans may get more favorable tax benefits from 529 plans sponsored by their own state. Consult your tax professional for how 529 tax treatments and account fees would apply to your particular situation. To determine which college saving option is right for you, please consult your tax and accounting advisors. Neither APFS nor its affiliates or financial professionals provide tax, legal or accounting advice. Please carefully consider investment objectives, risks, charges, and expenses before investing. For this and other information about municipal fund securities, please obtain an offering statement and read it carefully before you invest. Investments in 529 college savings plans are neither FDIC insured nor guaranteed and may lose value.

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