I am saving for kids' college expenses and heard (somewhere?) that one's expected contribution for college will be calculated at 100% of the child's assets and 7% of the parents' assets. (I believe it was a rule-of-thumb estimated from the FAFSA Expected Family Contribution Worksheet.)

But I save tax-free for my child (529 plan), whereas gains I make saving in my name will be taxable.

So from one direction there's an incentive to save in my name (visibility to academic institutions) and from the other there's an incentive to save in my child's name (taxation). This makes me believe there's a "right" mix of these savings: the mix that reduces the assets "visible" to financial aid offices while losing as little as possible to taxation.

How do I figure out this mix? In short, I have X dollars to save for college: assuming the same returns how much should be in my kids' name (untaxed) and how much should be in my name (taxed)?

  • I'm happy to provide more details if needed: state of residence, effective tax rate, age(s) of child(ren), &c. I'm not sure what might matter, though, so figured I'd leave it out for now.
    – nitsua60
    Jul 31, 2018 at 1:59
  • How are you saving in their name with pre-tax dollars?
    – Hart CO
    Jul 31, 2018 at 2:49
  • 1
    But 529 plans aren't pre-tax contributions.
    – Hart CO
    Jul 31, 2018 at 3:00
  • @HartCO thank you--it's been a long time since I looked too closely at these things. ("Set it and forget it.") I've tried to clean it up--look correct?
    – nitsua60
    Jul 31, 2018 at 3:06
  • I'm not an expert on 529 plans, but I don't think there's any tax benefit to having it in your child's name vs yours, unless the distribution weren't used for education. Most plans allow changing owners, and some states allow deductions for contributions, but it varies. For federal aid, they treat the 529 plan as if it were owned by the parent, institutional aid rules can vary.
    – Hart CO
    Jul 31, 2018 at 3:20


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