Financial wellness and planning

Research offers families a framework for financing higher education

November 16, 2021

1) Evaluating factors for financial aid eligibility
When it comes to financial aid, income counts more than assets
This table shows how parental and student income and parental and student assets can affect financial eligibility. For every additional $1,000 of parental income, need-based financial aid could be reduced by up to $470. Parental income types include employment and business income, distributions from retirement accounts, dividends and capital gains distributions, realized capital gains, and retirement contributions. For every additional $1,000 of student income, need-based financial aid could be reduced by up to $500. Student income types include trust income, and gifts including 529 distributions from grandparents or other nonparental relatives. Parental and student assets include 529 savings owned by parents or dependent student, Coverdell ESA savings, and taxable savings and investment accounts. For every additional $1,000 of parental assets, need-based financial aid could be reduced by up to $56. For every additional $1,000 of student assets, need-based financial aid could be reduced by up to $200.
2) Being aware of tax savings and tax consequences
3) Creating a plan to cover each year’s college costs
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