State Treasurer of Iowa

Debunking 529 myths

Fiction: Your kids will receive a lot less federal financial aid because of 529 savings.

Fact: Savings in a 529 account will not affect your federal financial aid eligibility any more than, say, the money in your bank account.

As the account owner, your 529 savings are considered part of your assets, not your child's. All of your savings and investments except those in your retirement plans (including your 529 account, bank account and other holdings) will be considered as part of your financial aid application. In general, your eligibility for aid should be reduced by no more than 5.64% of the amount of your total savings. 

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