Santa Fe, NM, Nov. 15, 2023 (GLOBE NEWSWIRE) -- Earlier this year, FAFSA (Free Application for Federal Student Aid) rolled out new regulations for the 2024–2025 award year, including important changes that impact 529 education savings plans. Under the new regulations, grandparent contributions will no longer negatively affect a student’s financial aid eligibility—creating further flexibility for grandparents to contribute to their grandchildren’s future educational opportunities. By utilizing a 529 education savings plan, like the one offered through The Education Plan®—New Mexico’s direct-sold 529 education savings plan—grandparents can save as they’re able and contribute for future qualified education-related expenses.
“Not only do 529 plans offer flexibility in terms of facilitating the education path that best fits your child or grandchild’s needs, but the funds can be used for a variety of expenses, making them one of the most robust options for forward-thinking family planning,” said Natalie Cordova, Executive Director of the Education Trust Board of New Mexico, the organization that administers The Education Plan®.
Under previous FAFSA regulations, withdrawals from grandparent-owned accounts counted toward the student’s available funding for college. Funds were reported as untaxed income, with 50% of the funding counting as available funds for college—diminishing financial aid eligibility. With the recent change, grandparent-owned 529 accounts are not reported as income, gifts, or available funding, meaning the student’s eligible financial aid amount will no longer be impacted.
“This is a huge opportunity for all families,” added Cordova. “Any amount saved now can help reduce the burden of student loan debt. Studies show that students with as little as $500 saved for college are three times more likely to attend college and four times more likely to graduate. With the holidays around the corner, it’s a perfect time to think outside the box and into the future by gifting contributions to a 529 plan. You’ll be setting them up for a brighter future with the gift of education.”
529 plans can be used for a wide range of qualified education expenses including tuition, books, room and board, meal plans, computers and software, educational special needs services, K-12 tuition (up to $10,000 per year), apprenticeship expenses, and even student loan repayment (up to $10,000). Funds can be used at any accredited trade or vocational school, college, or university throughout the nation.
For more information or to open an account, visit TheEducationPlan.com.
