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"The federal government treats prepaid tuition plans the same as college savings plans for financial aid purposes. These plans are reported on the federal aid application as an asset of the parent, if the parent is the account owner, and assessed at a rate of 5.6 percent (they're not reported at all if the account owner is someone else, for example, a grandparent [other than the student]). Any distributions (withdrawals) from the plan that are used to pay the beneficiary's qualified education expenses are not counted as either parent or student income."


"Regarding institutional aid (aid distributed by colleges from their own endowments), most colleges treat both college savings plans and prepaid tuition plans as parental assets and withdrawals as student income."


Regards, JAFO
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