? FAFSA & College savings (UTMA vs 529)

[Susan in TN 59,216]

We set up an UTMA (mutual fund) when ds was very young and have contributed about $500 annually on average.  So not much.  But it has gained more equity in the past few years than we expected, enough to think we might want to use some of the money to purchase an inexpensive used vehicle for ds.  I have been reading recently that when filling out the FAFSA, it is more beneficial to have college savings in a 529 plan because they are considered the parent's assets rather than the student's assets, as are UTMA funds, and might help with financial aid package offers. The downside is that with an UTMA, the funds can be used for anything that is for the child's benefit, while 529s can only be used toward educational expenses. 

 

So we are wondering if we should withdraw the UTMA funds, use some to purchase a vehicle and put the rest into a custodial 529 college plan.  That way, he can have a vehicle (which may or may not be really helpful depending on where he goes to college) and also give a possible advantage in the FAFSA report.  (We're not expecting anything dramatic here, but every little bit helps, kwim?) 

 

Any thoughts on this?

 

(the whole thing just wants to make me hide under my pillows :ack2:)