<p>Here is another site suggesting transferring the ownership</p>
<p>[529</a> Plan Account Transfers - Bogleheads](<a href=“529 plan account transfers - Bogleheads”>529 plan account transfers - Bogleheads)</p>
<p>"Most 529 plans will allow a plan owner to transfer a 529 plan to a new owner, such as one’s spouse, child, or grandchild, without restriction (although the IRS has indicated that it is going to issue proposed regulations to stop abusive practices). [6] However, a number of state plans (see table below) do restrict ownership transfers. If one wishes to transfer ownership of a 529 plan from a restrictive state, one should first transfer the 529 plan to a state plan that allows ownership transfers, and then execute the transfer. Currently, New York is the only state placing restrictions on ownership changes that also imposes a recapture tax on past tax deductions for out of state rollovers. "</p>
<p>Do make sure that Grandpa’s accountant is on board with all of this. Don’t know his particular situation and there may be other ramifications and needs in the mix here.</p>
<p>also this one: [FinAid</a> | Grandparents helping Grandchildren Pay for College](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>
<p>Just to make it simpler and get this out there, will quote. But note that, much as Finaid.org helped me get my bearings, one has to confirm. Not all their wording is updated.</p>
<p>Giving Directly to the College </p>
<p>Many personal finance and tax experts recommend giving money directly to the college to avoid gift taxes. This is bad advice for most families because it hurts eligibility for need-based financial aid. It should only be considered if the family does not qualify for need-based financial aid and the annual gift tax exclusion is insufficient. </p>
<p>Section 2503(e) of the Internal Revenue Code provides a gift tax exclusion for money paid directly to an education institution to pay for tuition on behalf of a student. However, the exclusion is limited to amounts paid for tuition (not room and board or other expenses) and the payment does not count as a charitable contribution. The potential gift tax savings will also be much less than the negative impact on need-based aid, yielding no net benefit to the student. Moreover, with the annual gift tax exclusion at $13,000 ($26,000 joint) in 2009, it doesn’t seem like it is really necessary to make the payment directly to the college. </p>
<p>Direct payments to the college will be treated unfavorably by federal need analysis. It cannot be treated as just a payment on the student’s account because eligibility for the gift tax exclusion is dependent on the amount being paid for tuition. There are two possible approaches based on the statute and regulations. One approach treats the payment as untaxed income to the child (i.e., cash support within the scope of section 480(b) of the Higher Education Act of 1965). This reduces need-based aid by 50% of the amount of the direct payment. Another approach treats the payment as a resource (i.e., estimated financial assistance within the scope of the regulations at 34 CFR 673.5(c)(1)(xiii)). This reduces need-based aid by 100% of the amount of the direct payment, dollar for dollar.</p>
<p>…
Sure seems to me this works better for the grandparent than the child. One would need to view the GP credit against the Gchild potential loss.</p>
<p>AND, no, I’d bet granddad’s accountant is NOT finaid savvy.</p>
<p>Reviving this thread…</p>
<p>What if the parents take out PLUS loans to pay the college and the grandparent writes a check to pay off the parent PLUS loan?</p>
<p>Please use old threads for information only, do not post and revive them. The OP has not been active since this post and if you want to ask a question yourself, please use the New Discussion button.</p>