Where to Report a 529 Plan on the FAFSA
Discover how 529 plans are factored into FAFSA calculations and their effect on student financial aid eligibility.
The Free Application for Federal Student Aid (FAFSA) serves as a gateway to various financial aid opportunities for higher education, including federal grants, loans, and work-study programs. A 529 plan, formally known as a qualified tuition program, offers a tax-advantaged savings vehicle designed to help families save for education expenses. Understanding how these two financial tools intersect on the FAFSA is important for maximizing aid eligibility. Proper reporting of 529 plans on the FAFSA can significantly influence financial need.
Determining 529 Plan Ownership
How a 529 plan is reported on the FAFSA depends on who legally owns the account. This ownership distinction determines if the plan’s value is an asset and where it should be listed. The primary ownership categories include parent-owned, student-owned, and accounts held by other relatives, such as grandparents.
A parent-owned 529 plan is the most common arrangement for dependent students, where a custodial parent is the account owner. Less frequently, an independent student might own their own 529 plan, which alters its reporting classification. 529 plans owned by grandparents or other non-parent relatives are treated distinctly on the FAFSA. The FAFSA requires reporting assets based on legal ownership, which determines how the 529 plan’s value contributes to financial aid.
Reporting Parent-Owned 529 Plans
Parent-owned 529 plans are reported as a parent asset on the FAFSA. The balance of these plans should be included in the “Net Worth of Investments” section of the parent’s financial information on the FAFSA.
When reporting, families should provide the current account balance as of the date the FAFSA is filed. This figure represents the total value of the investment, not contributions made or withdrawals taken. If a parent owns multiple 529 plans, their combined total value should be reported in this single field.
How 529 Plans Affect Financial Aid
The balance of a reported parent-owned 529 plan impacts a student’s eligibility for financial aid by contributing to the calculation of the Student Aid Index (SAI). The SAI is the figure used to determine a student’s financial need, replacing the former Expected Family Contribution (EFC) under the FAFSA Simplification Act. Parent assets, including 529 plans, are assessed at a maximum rate of 5.64% of their value in the SAI calculation.
This assessment rate means that for every $10,000 in parent-owned 529 assets, the SAI could increase by up to $564. While parent assets previously benefited from an asset protection allowance, this allowance has been set to $0 for the 2025-2026 FAFSA cycle. Despite this change, the impact of parent-owned 529 plans on financial aid eligibility generally remains minimal compared to other asset types due to this relatively low assessment rate.
Other 529 Plan Reporting Situations
Significant changes for 529 plans not owned by the student or parent began with the 2024-2025 FAFSA. Notably, grandparent-owned 529 plans are no longer reported as an asset on the FAFSA. This means the balance of such a plan does not directly affect the Student Aid Index calculation.
Distributions from grandparent-owned 529 plans are also no longer counted as untaxed student income. This removes a previous disincentive, as such distributions could significantly reduce aid eligibility. For independent students, a 529 plan they own is reported as a student asset and is subject to a higher assessment rate, typically 20%, than parent assets.