My in-laws are planning to give us some money to help with college costs. I’m trying to figure out whether it’s better for them to give it to us directly and we turn around and pay it to the college (and thus it’s not sitting in our bank account as assets), or better to put it into our kid’s 529 and pay the school out of that. This is for a CSS Profile school, and I’m aware that timing also matters. Does anyone have advice about the best way and timing for receiving this gift money so it doesn’t disproportionately hurt our need-based aid?
My mother set up their own 529 in the kids names and we paid bills directly out of them. I honestly dont know how that affects aid but it will have no impact on you. The other simple way is to just let them pay part of the bill directly though the student’s financial portal.
Grandparent 529, or grands pay bills directy, or if theyre in good health, direct gift to you or child during last yr of college.
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Effective with the 2024-25 financial aid year, the FAFSA will no longer ask about untaxed income (including gifts to the student). There is no word yet on whether Profile will ask for that information, but I suspect it will. In that case, I honestly don’t think that it matters how the money is given … a gift intended for the student is a gift intended for the student. Waiting until the last two years, since the information requested is for prior-prior year, will mean it’s never reported (unless Profile asks questions about prior year - I can’t remember - in which case, have them contribute all in the final year of school).
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This Vanguard article may be helpful. It will depend on whether Grandparent 529 payments are considered untaxed income for the student as they have been. If so, consider using the Grandparent 529 money in the last 2 years of college when it will not appear in the final submission of financial aid docs.
The advice in the Vanguard document you link to regarding distributions from a grandparent-owned 529 or other gifts or “untaxed income” for the benefit of the student and the effect on FAFSA is no longer applicable. See the post above in this thread from kelsmom.
Yes, I did see @kelsmom 's comment. But it was not clear to me that the FAFSA changes wrt grandparent-owned 529 will necessarily be followed by the CSS Profile or for private institutional aid. Do you know if there is any info on that? I assume the FAFSA changes will apply only to the methodology for Federal aid.
At this point, nothing is available publicly about it.
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I agree with kelsmom that nothing is yet known as to how Profile colleges will change their institutional methodology, if at all. I was simply pointing out that the Vanguard document you linked to is now out of date regarding advice and information that pertains to FAFSA.
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