<p>Payments made on the student’s behalf DO have to be reported as gifts to the student on the FAFSA. It’s very clear in the regulations: When the owner is some other person (including a non-custodial parent), distributions from these plans to the student count as untaxed income, as “money received.” This is from the Federal Aid Handbook.</p>
<p>Some other person … refers to someone other than the student or custodial parent. In those two cases, the refund value of the 529 is counted as a parent asset.</p>