College Planning

Question 1

What is a 529 plan?

Answer 1

A tax-advantaged savings account for qualified education expenses.

Question 2

What is a Coverdell ESA?

Answer 2

An education savings account with lower contribution limits and income restrictions.

Question 3

What is a custodial account (UGMA/UTMA)?

Answer 3

An account held in a child’s name without tax benefits for education.

Question 4

What are the 529 contribution limits?

Answer 4

No federal limit, but annual gifts over $18,000 in 2025 may require reporting.

Question 5

Can you change the beneficiary of a 529?

Answer 5

Yes, to another qualifying family member without penalty.

Question 6

What expenses qualify for 529 distributions?

Answer 6

Tuition, fees, books, supplies, and room & board (half-time+).

Question 7

Are computers and internet costs qualified 529 expenses?

Answer 7

Yes, if required for attendance.

Question 8

Can 529s be used for K–12 expenses?

Answer 8

Yes, up to $10,000/year for tuition only.

Question 9

Can 529s be used for student loan repayment?

Answer 9

Yes, up to $10,000 lifetime per beneficiary.

Question 10

What happens with non-qualified 529 withdrawals?

Answer 10

Earnings taxed as income + 10% penalty.

Question 11

What is superfunding a 529?

Answer 11

Contributing 5 years of gift exclusions at once ($90,000 in 2025).

Question 12

What is the FAFSA?

Answer 12

The Free Application for Federal Student Aid.

Question 13

What does SAI (formerly EFC) mean?

Answer 13

Student Aid Index—estimated family contribution for college costs.

Question 14

Do 529s affect FAFSA?

Answer 14

Yes, as parental assets—they’re favorably assessed.

Question 15

How are UGMA/UTMA accounts treated in FAFSA?

Answer 15

As student assets—more heavily assessed.

Question 16

Do grandparent-owned 529s affect FAFSA?

Answer 16

Not anymore starting 2024-25.

Question 17

What is the FAFSA Simplification Act?

Answer 17

A reform of aid formulas and asset treatment.

Question 18

What is the American Opportunity Tax Credit?

Answer 18

Up to $2,500 per student for the first 4 years of college.

Question 19

What is the Lifetime Learning Credit?

Answer 19

Up to $2,000 per return for education at any age.

Question 20

Can you claim AOTC and use 529s for the same expenses?

Answer 20

No—expenses must be allocated separately.

Question 21

What if a scholarship is received after using 529 funds?

Answer 21

Withdraw an equal amount penalty-free (taxes still apply).

Question 22

Should 529s be your only college funding tool?

Answer 22

Not necessarily—balance with cash flow, credits, and retirement.

Question 23

What’s a healthy message about paying for college?

Answer 23

“We’ll support you, but we also have to protect our future.”

Question 24

What if clients want to pay all tuition but haven’t saved for retirement?

Answer 24

“Kids can borrow for school—you can’t borrow for retirement.”

Question 25

What’s the risk of overfunding a 529?

Answer 25

Underused funds may be penalized if withdrawn improperly.

Question 26

How to involve grandparents in college funding?

Answer 26

Coordinate ownership, reduce FAFSA impact, and align values.

Question 27

What’s a good coaching question around values?

Answer 27

“What support feels generous but not burdensome?”

Question 28

Analogy for a 529?

Answer 28

A backpack that grows your books tax-free—for school use only.

Question 29

Analogy for FAFSA asset impact?

Answer 29

Parent assets are a feather. Student assets are a brick.

Question 30

Reframe: “We don’t want our kid to have any debt.”

Answer 30

“Some debt can be a bridge—not a burden—if used wisely.”

Question 31

Analogy for superfunding a 529?

Answer 31

Like front-loading your rocket fuel—powerful but needs certainty.

Question 32

Reframe for guilt about not saving enough for college?

Answer 32

“Love isn’t measured in dollars—it’s in showing up and communicating.”