Back to All Posts

Can a Student Open Their Own 529 Account?

Nov 11th, 2020 • Damian Dunn

My son is going to college next fall. We have decided that my wife and I will pay half and he will pay half. We have a 529 to help with our half of the expenses. He has income and files tax returns each year. Can he also take out a 529 to help pay for his half of the expenses?


Yes, he certainly could open a 529 account to help pay for his expenses. He doesn’t necessarily need to, though. I’ll explain. 

Anyone can open a 529 account. Parents with children, grandparents who want to help their grandchildren, a young couple who doesn’t have kids yet, and yes, even students who plan on using the money for their own benefit. 529 accounts are fantastic tools to help pay for the expenses that come along with higher education because of their tax advantages. More specifically, those tax advantages are tax-deferred growth on the contributions and tax-free withdrawals if the money is used for a qualified purpose (room and board, tuition, supplies, etc.). Additionally, many states offer their residents a state income tax deduction or credit based on the amount of contribution. If you’re at all curious as to whether a 529 is a good choice for you, please look into it. 

Despite the significant opportunity we have available in 529 accounts, however, many times the savings accumulated isn’t enough to cover the need. Families then, typically, turn to financial aid to make up the difference. In order to determine how much aid the student is eligible for, the student (or family) needs to complete the Free Application for Federal Student Aid, or FAFSA. The FAFSA gives a look into the financial resources potentially available to the student each year and will calculate the aid available to them, as well as the Expected Family Contribution (EFC).  

The EFC is where you usually need to pay closer attention because it’s very concerned with who owns what assets. For example, the savings a student has is going to be weighted differently than the savings a parent has when it comes to determining available aid. Likewise with the ownership of investments. But what about 529 accounts? How are they weighted for EFC purposes?

Thankfully, there is no difference in how the EFC is calculated when considering the ownership of 529 accounts between students or parents. In fact, the student owned 529 account will be considered a parental asset for EFC purposes, and giving it the most favorable treatment possible. This means that if you’d like your son to open his own 529 account in order to help organize who is paying what for the education, that’s a perfectly reasonable answer. However, there is no benefit or penalty to having two separate accounts. If you and your son decide to use the account you’ve already created, he’ll be eligible for any tax breaks available through the state by contributing to that account just as he would if he were contributing to an account that he personally owned. 

In summary, the choice is yours to make. If you’d prefer he have his own account for any reason instead of contributing to yours, it’s entirely possible and won’t impact aid eligibility. 

Want more answers like this? Sign up for a Hey Money subscription to get this type of detailed answer to all your financial questions. True financial guidance is most helpful when it’s super personal to YOU. Learn more about our experts here.

Sign up for email updates