After years of saving for college in your 529 plan, the day has finally arrived that you need some of that money to start school. You have control of how much money you withdraw from your 529 account and what to spend it on. However, before you feel flush in cash, it’s important to know what is covered as a “qualified” expense.
As of January 2018, parents can now use their 529 plans to pay for private K-12 tuition. Originally designed for college, 529 plans allow tax-free earnings growth and tax-free withdrawals when the funds are used to pay for expenses that meet the requirements. That now includes private school tuition.
When approaching college financial aid for the first time, it can be difficult to navigate. Many parents wonder if their home equity is a factor in the FAFSA (Free Application for Federal Student Aid) and whether it impacts their student’s aid. For the majority of colleges that require the FAFSA, the value of your home and your mortgage payment will not affect your student’s financial aid.