A good rule of thumb is to save 1/3 of projected college costs, and cover the remaining 2/3 with current income, financial aid, scholarships and student loans. The more you save, the less your child will have to borrow to pay for college.
How much is too much for a 529 plan?
529 plan: Income and contribution limits. You can contribute as much as you like to a 529 plan, regardless of your income. These plans do have aggregate limits, but they’re high, ranging from $235,000 to $529,000, depending on the state.
What to do with money from 529 plan?
If you don’t have enough money between the 529 plan, AOTC and other funds to cover the full net price of your child’s college education, your child may need to borrow some student loans to help pay for college. Federal student loans, especially subsidized loans, are the best borrowing option.
When to change your 529 to a 529 plan?
Plus, most people will change the account owner or roll over the money to a parent-owned 529 plan or wait until after January 1 of the sophomore year in college to take a distribution, rather than have half the distribution amount reduce aid eligibility.
Can a 529 plan be reported as an asset on FAFSA?
If a college savings plan is owned by anyone other than the student or the student’s parent, such as a grandparent, it isn’t reported as an asset on the FAFSA, but it has the same impact on qualified expenses with regard to qualified 529 plan distributions and the AOTC. It is still better to claim the AOTC first.
Are there limits on how much you can borrow from 529 plan?
If you don’t borrow during the first few years because you front-loaded the 529 plan funds, you can’t borrow beyond the subsequent years’ annual limits to compensate. The sum of the annual loan limits for a dependent student is $27,000 over the first four years.
