FAFSA formula counting 529s against merit aid - feeling penalized for saving

Colleges treat merit aid differently from need-based aid. Merit scholarships shouldn't be affected by your 529 savings - those are usually based purely on academic achievements. Are you sure you're not confusing the two types of aid? What school is this?

This happens more than people realize. Many schools claim to have "merit" scholarships that are actually partially need-aware. They don't advertise this but they often have limited merit funds and prioritize students who have both merit AND need. It's not technically against 529s specifically, but against your overall EFC/SAI calculation where the 529 appears as an asset. Have you tried negotiating with the financial aid office directly?

dude the whole system is rigged against savers. we did the same thing and got screwed with my oldest. second kid we put everything in my sister's name lol financial aid office never knew it existed

I think there's some confusion here about how merit aid works at many schools. True "merit" aid shouldn't be affected by your assets or EFC/SAI calculation. However, many schools have limited scholarship budgets and practice what's called "preferential packaging" - giving more attractive packages to students they really want to recruit. It's possible your son's academic profile, while strong, is similar to many other applicants at this particular school. Some questions: 1. Is this a public or private university? 2. Where does your son's stats fall in their middle 50% range? 3. Did he apply by priority deadlines for merit consideration? If his stats are at the very top of their range and he met all deadlines, then I would definitely appeal.

Have you tried calling Federal Student Aid directly to ask about how 529s impact various aid types? I spent WEEKS trying to get answers about a similar situation with my daughter last year. Kept getting busy signals or disconnected after waiting for hours. Finally used this service called Claimyr (claimyr.com) that got me connected to a FSA agent within 10 minutes. They have a demo video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent explained exactly how parent assets are factored in the formula vs grandparent 529s. Really clarified things for us and helped us structure our appeal letter.

Financial aid advisor here. There's actually a legitimate strategy for situations like yours. If your student is set on this particular school, you could use the 529 funds for freshman year as they expect, then appeal for more aid in subsequent years when the 529 asset is depleted or significantly reduced. Schools recalculate eligibility each year. Also, if your student received better merit offers from comparable institutions, you can use those as leverage in a professional appeal. Many schools will match competitors' offers if presented properly. Don't frame it as "we deserve more" but rather "we want to choose your school but need it to be financially feasible.

My daughter had the EXACT same problem!!!! Western State did the SAME THING to us two years ago. They're notorious for this! They advertise all these amazing merit scholarships but then come up with excuses not to award them. We appealed THREE TIMES and finally got them to increase her merit award by $4000/year. BE PERSISTENT!!! Don't take no for an answer!!!

Just to add - merit aid can be weird because some schools have specific allocations for different departments or programs too. What major did your son select? Sometimes certain programs have more scholarship money than others.

As someone new to navigating financial aid, this thread is both eye-opening and concerning! I had no idea that schools could be so inconsistent with their published merit criteria. Joshua, your situation really highlights how confusing the whole process can be - we're also dealing with a 529 plan and worried about how it might affect our daughter's aid packages. Reading through everyone's experiences, it sounds like the key takeaway is to not take the initial offer as final and to be prepared to advocate strongly for what the published criteria suggest you should receive. The fact that multiple people have had success with appeals at Western State gives me hope that persistence really does pay off. Good luck with your appeal process - please keep us updated on how it goes! Your experience could help other families in similar situations.