The treatment of grandparent-owned 529s is changing for FAFSA purposes. How Profile schools will or will not change regarding grandparent-owned 529s is not yet known.
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Technically, a student-owned/custodial 529 account is not a parent asset; it’s a student asset. FAFSA used to treat these accounts as student assets until a change was made a number of years ago to benefit the student by classifying them as parent assets. I have not read through a recent version of the Profile because unfortunately, unlike FAFSA, the College Board does not make the current and past versions openly accessible online and neither I nor a child of mine has an active College Board account that would let me take a look. If you know what the language is on the 2023-2024 Profile that asks about student-owned/custodial 529 accounts, please post that language here.
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On the other hand, your post from 2016 opined that grandparent-owned 529 accounts did not have to be reported on the CSS Profile (or maybe that parents could get away with not reporting them?)
There is no “other hand.” The point I was making in my 2016 post is that Profile is asking for information about financial accounts (grandparent-owned 529 accounts) that the student and their parents may have no clue about. It would not be unusual for a grandparent to open and fund a 529 account for a grandchild without telling the beneficiary or the parents until after FA applications are completed during the application process. How is an account that the student and the parents know nothing about supposed to be reported on Profile? Even if the existence of an account has been hinted at, what if the grandparent owner declines to divulge the information that Profile is looking for?
Edited to add: it’s always been my opinion that if a FA application asks for information that is known to the student or a parent, the requested information should be reported.
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It’s difficult to find specific guidance about this specific situation on the CSS Profile. Looking through my notes, the information I have is that multiple financial aid offices of CSS Profile schools all confirmed last year when I specifically asked that they treat student-owned 529 accounts for dependents the same as FAFSA rules state: as parental-owned assets. I have this info because I received financial aid “pre-reads” from the schools for my D23 who was an athletic recruit and I had phone/zoom conversations with the FA staff getting into those details.
This article details FAFSA, but is more vague about CSS Profile:
You did ask “ Where are the instructions from CSS saying that such an account and its value need to be reported under section ES?”
Follow up results from testing out a handful of NPCs:
I ran the numbers for Kenyon, Grinnell, Haverford, and Carleton. I compared the net price with reporting parent assets of $150k vs. 50k assets. (Home equity and savings were reported separately.)
All 4 of these schools had a separate question for sibling assets. For the sake of testing out how the net price would change if we transferred sibling 529s back to the grandparent’s name, I left the sibling asset at $0 and the parent assets at $50k.
All 4 schools resulted in a $9k net price difference.
I still have a lot to consider, thanks to the insightful comments made in this thread!
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Probably because I couldn’t find anything about reporting grandparent-owned 529 accounts on the Profile forms that I had access to at that time.
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I just want to say that is a big difference in aid. As one of the posters who originally implied transferring to the grandparents sounded borderline unethical I wanted to say your additional information about the grandparents funding and originally holding the 529s moves the needle for me - I totally get wanting to maximize aid in the circumstances mentioned and support transferring them back. I’d do the same. My only concern remains what happens if the grandparents die prior to your younger kids finishing college and if that money could get tied up just when you need it. But hopefully that won’t be an issue. Good luck!
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Yes, I agree that CSS Profile guidance out there is lacking! Especially for specific technical questions that don’t apply to the vast majority of applicants.
And because relatively few schools use the CSS Profile, there is a lot more info available on-line for FAFSA questions.
Relevant to this discussion, the 2023-24 CSS profile does ask this: under “Student Resources. How much does XXXXX expect to receive from the following sources to pay for educational expenses for the 2023-24 academic year?”
“Relatives other than their parents and any other sources providing funds to help pay for college expenses”
[edited to add]. I have a document with detailed instructions on the 2020-21 version from the College Board (“2019-20 CSS Profile Comprehensive Question and Instruction Listing”). It states this for “Total value of parent assets held in the names of their children”.
“Include funds in custodial accounts, UGMA (Uniform gifts to minors) accounts, or other savings and investment accounts for the student’s siblings who are under the age of 19 and not enrolled in college. Funds held in 529 college savings or prepaid tuition accounts should not be included here, but should be included as one of the parents’ investments.”
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I also recommend running the NPCs with and without home equity included to determine sensitivity of their model to that. Then compare to this list to see how well it seems to accord.
https://www.thecollegesolution.com/wp-content/uploads/2014/08/Home-Equity-Spreadsheet.xlsx
Some of the colleges program their NPC accurately to take into account their stated income multiplier, while others do not. And some will be willing to budge/negotiate on the amount that home equity affects their aid estimates. In other words, don’t rule any place out on an initial NPC result as it may be affected by an inaccurate accounting for home equity impact.
[edited to add]: also keep in mind that there can be huge differences in the estimated net price among schools that meet full need, and this is often primarily driven by different methods of adjusting for home equity.
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When you are asking for financial aid, everything is on the table. It’s not just CC.
Also, keep in mind that right now, the net price calculators are set for students starting college fall 2023. That’s NOT this OP. The NPCs will be updated for the 2023-2024 applicants at some point. Because if the changes in the FAFSA, this might not happen until later than usual (usually updated at the end of summer, early fall). And yes, financial aid policies DO change. In addition, so will the cost of attendance, most likely.
So…if you are using the net price calculators with right now…use them as an estimate only.
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The custodial accounts and UGMA accounts referenced in the first sentence here are not 529 accounts; they are accounts holding parent assets that have been titled as such as a way to avoid paying income tax at the presumably higher parent rate. This practice used to be more common before the kiddie tax was expanded which made the practice less beneficial. The second sentence relating to 529 accounts describes parent-owned 529 accounts and not student-owned/custodial 529 accounts.
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Yes, I know. I just posted that because it was the only explicit reference to custodial accounts and sibling 529s in the instructions. Other than that, the instructions just mention 529s as being included in the parental investments section.
There is not explicit guidance otherwise. In that case, one would be advised to declare things in accordance with federal guidelines as detailed in the FAFSA. And as I have detailed above, multiple financial aid offices at CSS Profile schools have explicitly confirmed with me in the past year that they do this.
I don’t think one should make the assumption that a Profile school will follow the FAFSA methodology for reporting student-owned/custodial 529 accounts, despite what your personal experience may be and absent any explicit Profile instructions.
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You are not offering any evidence to the contrary. Sure, one should check if concerned. I already stated that. And I did do that myself.
My confirmation that multiple CSS Profile school financial offices all explicitly follow FAFSA methodology in this circumstance doesn’t mean others will, but it demonstrates a strong propensity.
Another thing: the parent makes the declarations on the form. Schools don’t double-check/verify every single entry. If one has strong reason to believe that they are declaring things properly and it is backed up by federal definitions and methodology, and it is also not contradicted by any published instructions or explanations for the CSS Profile, I see no reason to do it differently.