Trump Accounts May Boost Kids' Savings— but Experts Say it Could Cost Families Thousands in College Aid

President Donald Trump’s newly launched Trump Accounts could affect a student’s eligibility for need-based college financial aid, although the U.S.

Department of Education has not yet issued official guidance on how the accounts should be reported on the Free Application for Federal Student Aid, or FAFSA, according to a CNBC report published Thursday.

Trump Accounts, also known as 530A accounts, are tax-deferred investment accounts created under the One Big Beautiful Bill Act.

Eligible U.S. children born between Jan.

1, 2025, and Dec.

31, 2028, can receive a one-time $1,000 contribution from the U.S.

Treasury, while families and others can contribute up to $5,000 annually.

FAFSA Treatment Remains Unclear Higher education expert Mark Kantrowitz said Trump Accounts would likely be reported as student assets on the FAFSA if they are treated as investment accounts.

Student assets are assessed more heavily than parent assets when calculating need-based financial aid. “A Trump Account will be reported as a student asset on the FAFSA,” Kantrowitz said.

He estimated that a $10,000 account balance could reduce need-based grants by as much as $2,000 if the account is treated as an investment asset.

Because every eligible child receives the government’s $1,000 seed contribution, even families that make no additional deposits could see some impact on financial aid eligibility. “The government gives with one hand while taking back with the other,” Kantrowitz said.

However, financial aid consultant Kalman Chany said the accounts could eventually be treated more like traditional retirement accounts after beneficiaries turn 18.

Under current FAFSA rules, retirement accounts such as IRAs are generally not counted as reportable assets.

The U.S.

Department of Education has not yet released official guidance on how Trump Accounts should be reported on the FAFSA, leaving the accounts’ treatment for financial aid purposes uncertain.

Despite that uncertainty, Chany said eligible families should still take advantage of the government’s contribution. “It would certainly make sense to claim the $1,000 initial seed deposit from Uncle Sam if the child meets the eligibility guidelines,” he said, adding that “in a worst case, one would not lose more aid than the value of the account funded by that seed money.” The report also noted that withdrawals could have financial aid implications.

While contributions can be used for higher education after age 18, investment earnings are taxed as ordinary income, and student income above certain thresholds can also reduce future need-based aid.

Read Also: Top 3 Real Estate Stocks That May Rocket Higher In July Growing Support Support for the program has continued to grow since launch.

Maryland Gov.

Wes Moore recently called Trump Accounts “actually a smart policy,” while Dell Technologies Inc (NYSE: DELL ) founder and CEO Michael Dell said the initiative could help children build long-term wealth while supporting goals such as higher education, homeownership and starting a business.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.

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