• FAFSA uses the Student Aid Index (SAI). Parent assets are generally assessed at a maximum of about 5.64%; student assets can be assessed up to about 20%.
• CSS Profile (used by many private colleges) can consider more assets than FAFSA and may consider primary‑home equity depending on the school.
• Timing matters: FAFSA takes a snapshot of assets on the day you file and uses “prior‑prior year” income.
• Strategy: Favor parent‑owned 529s; be careful with large student‑titled accounts.

• Parent‑owned 529s: Treated as a parent asset on FAFSA (generally favorable).
• Student‑owned non‑529 (UGMA/UTMA): Counted as a student asset; consider spending down before filing FAFSA for necessary education‑related items or converting to a custodial 529 (where allowed) for better FAFSA treatment.
• Grandparent‑owned 529s: Under the redesigned FAFSA, distributions are no longer reported as student income for federal aid; CSS Profile policies may differ—check each school.
• Practical tip: Align ownership with your target colleges’ aid methodology (FAFSA‑only vs. CSS) and confirm each school’s policy.

• 529 plans grow tax‑deferred and qualified withdrawals are tax‑free for tuition, fees, required books/supplies, and certain room & board.
• Coordinate with education credits:
– American Opportunity Tax Credit (AOTC): Up to $2,500 per eligible student (first 4 years of undergrad), partial refundability; to maximize, pay at least $4,000 of qualified tuition out‑of‑pocket (not with 529 dollars being used for the same expense).
– Lifetime Learning Credit (LLC): Up to $2,000 per return for qualified expenses (no 4‑year limit, broader program eligibility).
• Avoid double‑counting: You cannot use the same $4,000 of expenses both for AOTC and as the basis for 529 tax‑free withdrawals.

• Illinois (Bright Start / Bright Directions): State income tax deduction up to $10,000 (single) or $20,000 (married filing jointly) annually for contributions to Illinois‑sponsored 529s. In‑plan rollovers and contribution timing can affect eligibility—verify current rules.
• Missouri (MOST 529): State income tax deduction up to $8,000 (single) or $16,000 (married filing jointly) annually for contributions.
• Annual limits and tax rules can change; confirm current amounts each year.

• Potential tax‑free, penalty‑free rollovers from a 529 to the beneficiary’s Roth IRA, lifetime limit currently $35,000, subject to strict conditions:
– The 529 must be at least 15 years old.
– Rollover amounts are limited by the annual Roth IRA contribution limit and require beneficiary earned income at least equal to the rolled amount.
– Certain recent contributions may be ineligible (5‑year lookback). Execute as trustee‑to‑trustee transfers.
• This can be a backstop for overfunded 529s when the beneficiary has earned income.

• Step 1: Maximize AOTC—plan to pay $4,000 of tuition from cash (or non‑529) each tax year of eligibility.
• Step 2: Use 529 for remaining qualified expenses after protecting the AOTC.
• Step 3: Favor parent‑owned 529s; minimize student‑titled assets before filing.
• Step 4: Capture Illinois/Missouri deductions by funding in‑state 529s before year‑end (subject to current rules).
• Step 5: Coordinate grandparents’ giving—grandparent 529s no longer create taxable student income for FAFSA; still confirm CSS treatment at target schools.
• Step 6: If you may overfund, design for a potential 529‑to‑Roth rollover later under SECURE 2.0.

• Building large UGMA/UTMA balances that erode aid eligibility.
• Double‑counting expenses for both AOTC and 529 withdrawals.
• Ignoring CSS Profile nuances (e.g., potential home‑equity consideration) at private schools.
• Missing state contribution deadlines and documentation for deductions.