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FAFSA 6 min read
Will a 529 hurt my kid's financial aid?
The short answer: barely. The long answer involves the FAFSA Simplification Act and a quirk that actually makes grandparent-owned 529s strictly better than they used to be.
This is the question that paralyzes a lot of well-intentioned savers. Good news: as of the 2024-2025 FAFSA, the rules changed in favor of 529 savers.
The new rules in plain English
Parent-owned 529s count as a parent asset — assessed at a maximum of 5.64% in financial aid calculations. So $50,000 in a 529 reduces aid eligibility by at most $2,820.
Grandparent-owned 529s used to count as untaxed student income (a much worse hit). Under the new rules, they don't appear on the FAFSA at all.