[Music] The free application for federal student Aid or FAFSA has been plagued by Technical issues since being launched Late last year however there is some Good news for some extended family Members hoping to help pay for college Students do not have to answer questions About contributions from a grandparent In the new forms this creates a loophole In which grandparents can provide funds To their grandchildren for college Without impacting their financial aid Eligibility she Jillian Burman is here To dig into this with us she is the Deputy Enterprise editor at MarketWatch Okay Jillian how can you explain how Exactly this so-called grandparent Loophole works and can only grandparents Use It sure so the way that colleges and the Government calculate how much federal Financial aid students are eligible for Is based on a bunch of different factors Um you know family's income assets Things like that in the past People they the the formula would take Into account contributions from a 529 Owned by a grandparent so that could Mean you know your your grandparent you You withdraw $10,000 from a 529 owned by A grandparent to pay for college that Reduces your financial aid eligibility By up to
$5,000 that's been changed so now you Know when the government is deciding how Much financial and colleges are deciding How much financial aid you're eligible For contributions from a grandparent Owned account Don't count so you can you know use that Money and it won't reduce your federal Financial aid eligibility in addition You know this this applies to other Relatives um friends things like that so You know it's really something that People other than grandparents can take Advantage of too really interesting all Right talk to us more about these 529 Plans and other ways that can be used to Help Students yeah so experts recommend that You know in paying for college you use a Combination of resources one is current Income so you know whatever money you're Making at the time that a student goes To college one is financial aid so that Could be grants loans um you know Scholarships things like that and then The other is savings and a 529 plan is Really one of the best ways to save for College um you know it it's basically an Investment account um but the money Grows tax-free and withdrawals are Taxfree as long as you use them towards Qualified educational expenses which is You know basically anything involved in Paying for college um including books
And and things like that so it's really A way to you know sort of make your your Money grow over time you know you put Some money in now and hopefully if you If you have a baby or a young child by The time they get to College um that Those funds will have grown yes the Magic of compounding interest right Besides besides the grandparent loophole Are there other benefits of the new FAFSA form that students should know About definitely so it's much shorter That's you know kind of the main benefit That was you know one of the biggest Goals of this FAFSA overhaul was to make It shorter and easier to fill out um the Roll out has been glitchy but now that Students can you know successfully log Into the form it should take you know We've heard people saying 10 to 15 Minutes it has two-thirds fewer Questions um than it did in the past in Addition you know the the overhaul was Aimed at directing more Aid to Low-income students and so you know more Students will qualify for AEL Grant Which is the government's main um grant Program for low and middle middle- Income students And more will qualify for the maximum Grant as well all right a lot of good Information Jillian Burman Jillian thank You so much thanks for having me
