Paying for College Just Got a Lot Harder

The Department of Education is calling this the “most ambitious and significant redesign of the federal student aid application in decades”

Major changes include:

- Parents or guardians with more than one child in college will not receive a break or discount on their Expected Family Contribution (EFC)
- Small business owners and family farms will no longer be able to exclude their business and farm assets from the FAFSA

Potential major changes include:

- The new Free Application for Federal Student Aid (FAFSA) formula for divorced parents says that the parent who has spent the most money on the child in the previous 12-month period will be completing the FAFSA.
- Changes in the federal aid formula will allow an additional 1.7 million students qualify for the maximum Pell Grant, which is the federal program for low- and middle-income students.

There are major positive changes for grandparent-owned 529 plans or other relative-owned 529s.

- Qualified distributions from a 529 plan that are owned by relatives will no longer be treated as income for the child’s portion of the Student Aid Index (SAI), formerly the Expected Family Contribution.

Tune into this podcast to listen to Ben and Adam discuss how these changes may impact your situation and where new planning opportunities should be explored.

[4:11] The formula for determining how much to expect to pay for college
[5:11] Understanding the expected family contribution
[11:18] Planning implications for business owners and farmers
[14:07] Impact to grandparent-owned 529 plans
[16:46] The importance of proactive planning and flexibility

Tracking # T005865

Source:

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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.