I've read that in a number of 529 program disclosures, and other places, a description of the federal financial aid treatment of 529 plans that differs from SavingForCollege.com's explanation of the changes made last year in the financial aid law. SavingForCollege.com's interpretation, supported by notices issued by the U.S. Department of Education, is that student-owned 529 accounts are no longer reported on the FAFSA when the student has to include parent income and assets (i.e. the student is applying as a dependent). But elsewhere you may read that the student-owned 529 account is counted as a parent asset at a maximum 5.6% rate. Who's right?

I side with SavingForCollege.com, based on the law as written. It appears that others may be anticipating an amendment to the law, sensing that the elimination of student-reported 529 accounts was an unintended drafting error. To us that seems a bit presumptuous. Congress clearly intended to put 529 accounts and Coverdell education savings accounts in a special place as a way to encourage the use of college savings plans by American families. But no matter who is right about what the law currently says or is supposed to say, in the worst case a student- owned 529 escapes the 35% assessment levied against other student-owned investments (dropping to 20% next year) and instead is assessed at a maximum 5.6% rate. Still a good deal.

If you want to learn all about college planning (how the plans work, options to reduce expenses, etc) including other options to pay for school (Ex. scholarships like this one) then join me this Saturday evening at Community Bible church. See more in the 'Events' section of this e~newsletter.