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April 28, 2025

Does a 529 plan affect financial aid?

  • The short answer is yes, but there are nuances.
    • By HYUNMIN KIM and MARGARET GILES
    Morningstar

    A 529 college savings plan can be a powerful tool when saving for future education expenses because investments in the plan can increase tax-free, but many savers don't take full advantage of all the benefits that 529 plans have to offer.

    One common deterrent to investing through a 529 plan is the concern that assets in a 529 account will reduce financial aid eligibility. While it's true that 529 assets have an impact on financial aid, the effect is likely smaller than you think.


     
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