If you have a child in college now or one heading to an institution of higher learning in the fall, I hope you have already submitted or are working on the Free Application for Federal Financial Aid.

This form – FAFSA – is necessary to get federal aid. And the sooner you submit it, the more likely your kid will be first in line to receive whatever scholarships or grants schools have to offer. The free money goes fast.

This is also the time to find out as much as you can about the various ways to save for school. One of the best ways is to invest in a 529 plan, in which money grows tax-free and withdrawals used for qualifying education expenses are not taxed. To help you learn more about these type of plans, I recommended reading “The Best Way to Save for College: A Complete Guide to 529 Plans,” by Joseph Hurley.

Hurley was my guest recently for an online discussion. Following are the answers to some of the questions we didn’t have time for:

Q: When applying for need-based financial aid, I know that institutions look at both parental and child resources. Do you know whether a 529 savings account would count against a family? It seems like a disincentive. The families who don’t save will ultimately get more (free) need-based aid as they have no savings and are needier.

A: Before I get to Hurley’s answer, I should explain that when you apply for federal financial aid, whether it comes in the form of loans, work study, scholarships or grants, the government expects every family to contribute to the cost of their child’s education if they can. Many parents often ask if it’s better that they don’t save. They theorize that by saving they will be expected to use that money to help pay for their child’s education. That, they believe, makes them suckers because their kids won’t get as much financial aid while the children of people who are spendthrifts make out like bandits.

That’s a wacky theory.

“Families who splurge and don’t save for college usually end up in a crisis situation,” Hurley says. “The expected family contribution can be affected more by what you earn than by what you have saved.

The assessment rate on your income is as high as 47 percent, while the assessment rate on your investments tops out at only 5.64 percent. Parents making good incomes, and spending it all, will not necessarily qualify for need-based aid and they won’t have the savings needed to pay college costs.”

Minus certain allowances, 50 percent of a student’s income and 35 percent of assets in his or her name are expected to be used to pay for college. (The asset allocation will go down to 20 percent beginning in July.) A 529 plan is considered a parental asset in the determination of federal financial aid.

Q: Looking for information on 529 plans and special-needs kids. Is it worth it to set one up with all the future unknowns?

“If the odds of the child attending college are low,” Hurley says. “you should probably avoid 529 plans unless you have other family members who could use the funds for college; 529 plans can work very well for children with special needs who are likely to attend college. In fact, the additional expenses of a special-needs beneficiary, e.g. special reading equipment for a blind student, can be paid for with 529 funds.”