As a parent or grandparent, you know firsthand the challenges of funding a child’s education. The Free Application for Federal Student Aid (FAFSA) Act was passed at the end of 2020 and has changed some of the qualifications for students to receive financial aid.

These changes will affect those applying for financial aid for the 2023-2024 school year.

You’ll notice these changes on October 1, 2022, which is when the FAFSA opens for the 2023-2024 school year.

529 plans from grandparents are no longer counted as cash against financial aid.

One of the most confusing parts of the FAFSA process was how to account for cash funding. While the FAFSA doesn’t require 529 accounts owned by grandparents to be disclosed, families are required to disclose cash support that the student receives. This cash support may then include money from a 529 account. If students received money from these accounts, the student was still expected to disclose these disbursements as cash, and very often, financial aid needs and options were reduced.1

Parent-owned 529 plans are automatically factored into the FAFSA when a dependent files, and are only evaluated for up to 5.64% available for college use (no more than any other non-qualified asset).

A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. State tax treatment of 529 plans is only one factor to consider prior to committing to a savings plan. Also, consider the fees and expenses associated with the particular plan. Whether a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary. State tax laws may be different from federal tax laws. Earnings on non-qualified distributions will be subject to income tax and a 10% federal penalty tax.

A simplified questionnaire.

The FAFSA has been greatly reduced in size, from 108 demographic, educational, and identification questions to a maximum of 36 questions. Part of the restructuring was aimed at clearing up confusion as to who is and is not a dependent student, and what type of assets need to be included.2,3

Student Aid Indicator (SAI) calculation changes.

Part of the questionnaire changes were due to changes made to the calculations for financial aid. The Student Aid Indicator (SAI) is the math behind the scenes that determines what types of funding and how much a student is eligible for. Keep in mind that these calculations are still complicated, but that overall, eligibility for financial aid has been broadened.4 Some of the questionnaire changes were due to changes made to the calculations for financial aid. The Student Aid Indicator (SAI) is the math behind the scenes that determines what types of funding and how much a student is eligible for. Keep in mind that these calculations are still complicated, but that overall, eligibility for financial aid has been broadened.4

For more information, visit studentaid.gov.

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be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are
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LLC.
This is not an offer to buy or sell securities, nor should anything contained herein be construed
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opportunities will be profitable or suitable for all investors. Past performance is neither indicative
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These materials were created for informational purposes only; the opinions and positions stated
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Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only
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believed to be reliable but not independently verified. Information provided is as of the date
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not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such
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6 Meridian is a group comprised of investment professionals registered with Hightower
Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also
be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are
offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities,
LLC.
This is not an offer to buy or sell securities, nor should anything contained herein be construed
as a recommendation or advice of any kind. Consult with an appropriately credentialed
professional before making any financial, investment, tax or legal decision. No investment
process is free of risk, and there is no guarantee that any investment process or investment
opportunities will be profitable or suitable for all investors. Past performance is neither indicative
nor a guarantee of future results. You cannot invest directly in an index.
These materials were created for informational purposes only; the opinions and positions stated
are those of the author(s) and are not necessarily the official opinion or position of Hightower
Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only
and based on generic assumptions. All data or other information referenced is from sources
believed to be reliable but not independently verified. Information provided is as of the date
referenced and is subject to change without notice. Hightower assumes no liability for any action
made or taken in reliance on or relating in any way to this information. Hightower makes no
representations or warranties, express or implied, as to the accuracy or completeness of the
information, for statements or errors or omissions, or results obtained from the use of this
information. References to any person, organization, or the inclusion of external hyperlinks does
not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such
person, organization or linked website or the information, products or services contained
therein. 
Click here for definitions of and disclosures specific to commonly used terms.

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