Change in 529 Plans Better for Families

The 529 college savings plan and 529 college prepaid tuition plan are vehicles many families are using to save for college tuition. The Budget Reconciliation Act that was signed into law February 8 contains a change that now allows the prepaid 529 plan to be treated the same as the savings 529 plan. This means that both plans will be treated as parental assets, of which no more than 5.6 percent should be counted when calculating financial need. Before the change, financial aid awards were often reduced, dollar for dollar, for funds saved in prepaid 529 plans.