Before going any further,
we turn our attention to probably the most significant concern that parents will face in
their consideration of QSTPs. This concerns relates to the financial aid programs
available to the student and the impact on financial aid awards of an account in a QSTP.
This concern certainly has some validity, because at the present time the federal
financial aid formula does not specifically exclude assets or income associated with a
In short, saving for college with a QSTP can negatively impact your
students financial aid eligibility. Of course, saving for college through other
means can have a negative impact as well, perhaps even worse. This process is explained
. The good news is that the treatment of QSTPs in the financial
aid formula may change in the future. There is a significant effort on the part of the
states to have the federal government exclude QSTP accounts in computing available assets
and income on the FAFSA. Unfortunately, such a change was not made as part of the most
recent reauthorization of the Higher Education Act which was signed by President Clinton
on October 7, 1998.