Uncle Sam is a brilliant banker

This article about state prepaid college savings plan raised an interesting point, without actually making that point. I noticed it because my experience reflects a flaw in the financial aid system for college. Consider:

But under the new law, prepaid plans will receive the same financial aid advantage that 529 college savings plans do. The money in 529 plans, which let parents save in a tax-advantaged investment account, is treated as the parents’ money. And under the federal aid formula, only 5.64% of parents’ money is expected to go toward college expenses, [Mark Kantrowitz, a financial aid expert in Pittsburgh] says.

I haven’t dealt with undergraduate financial aid in more than a decade, so perhaps the rules have changed, but when I attended college, I faced a different reality than some alleged 5.64% parental responsibility. Coming from a poor background, I knew two facts: I was going to college and I was paying for it. The federal financial aid process would only recognize one of those facts by making it virtually impossible for anyone other than an orphan or 23-year-old to be considered independent financially from his parents. My mother had to take out PLUS loans, which amounted to 40% of the total I borrowed for four years of undergraduate study because the borrowing limits for me as the student were capped. (They still are.) So I ended up with only 60% of the debt from my 94.36% federal responsibility. My mother enjoyed debt totaling 700% of her responsibility.

But let’s continue pretending that turning private dealings over to the rule-making of government nannies works best.