<p>As I understand it, if the 529 is in a grandparent's name (for the benefit of student), then the balance is not taken into account when calculating FA eligibility.</p>
<p>But, if the 529 is in the grandparent's name for the benefit of student, does that make it the grandparent's asset for all purposes? In other words, can grandparent's creditors attach the balance in the 529 account, since it's in grandparent's name?</p>
<p>Is there any way to set it up as a trust, so that the grandparent is the trustee (rather than owner) . . . or would it then become a student asset again?</p>
<p>If it’s in the grandparent’s name, it is not an asset. However, on the next FAFSA, the student has to report the amount received from the grandparent for school as other income.</p>
<p>As for the rest of your questions, I don’t know …</p>
<p>We have grandparents that set up trusts for the grandkids education. It is NOT a 529, they also set up those in their name, but we count the trust money as the child’s asset.</p>
<p>S attends a school that requires CSS PROFILE. Besides asking questions re 529s that are parent or student asset, the school includes supplemental questions re 529 or other accounts owned by “others” (such as grandparents) for the benefit of the student.</p>
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<p>Well, that’s the problem, isn’t it? If it’s the child’s asset, it’s safe from grandparent’s (or parent’s) creditors, but it will be used up to pay for college. But if a grandparent (or parent) owns the 529 account . . . well, it’s vulnerable to seizure by grandparent’s (or parent’s) creditors.</p>
<p>And, just for the record, I’m not saying save the money, get massive grants from school, and then go out and buy a Jaguar when you graduate. But if the fund is limited, then it makes sense to stretch it out as long as possible, especially if the student’s education is anticipated to take more than four years. For some families, depending on circumstances, a small college fund (set aside in a better economy) may be the only way to cover the family’s EFC. If the fund becomes a student asset, then all of a sudden that fund doesn’t stretch so far.</p>
<p>By the way, a bit of research has revealed that slightly more than half the states provide asset protection for 529 accounts. But slightly less than half do not. And the family that’s fallen on hard times and needs that account to stretch for all four years might well be the same family that has creditors at the door. So what’s the solution?</p>