Grandparent 529


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Mom is not married, I am married. The offer at this time is $15,000/school year or $1500/month over the 10 month payment plan (school year). So for this 2015 calendar year, my mom would be paying $7,500. Next year will be $15,000. The money is currently going to the school directly do I need to have it given to me (up to $14,000) or my daughter and then pay the expenses?

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You mom can gift you $14k

and mom can gift your H the remaining up to $14k.

Then, you the parents, would pay your EFC with that.

YES…the money needs to go to YOU directly. YOU need to pay the bills. Has Mom already given the money to the school?

Ok, so then I am understanding that she should gift money to parents at a max of $14,000/per person annually. We would not claim on our taxes or on FAFSA. It would not count as income to my daughter since she is not being given money directly, so I don’t report on FAFSA.

I still have the 529 that I need assistance with also. So can I withdraw $3,500/year for college related expenses and pay to school directly/student or parent? This disbursement would be reported on FAFSA as income to my daughter (grandparent is account holder with daughter as beneficiary). How does her part time job play into the financial aid equation?

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YES…the money needs to go to YOU directly. YOU need to pay the bills. Has Mom already given the money to the school?

There was 1 payment of $1500 that my mother paid directly to the school and another disbursement from 529 plan of $2500 that my Mom withdrew and then submitted to the school. Next payment ($2500) is due the 20th of the month. I have the $1000. My mom will gift me the $1500 and I will pay the $2500 bill.

With a $37000 EFC, does your daughter get a lot of need based financial aid? She wouldn’t qualify for Pell or SEOG.

I just don’t see where it would matter unless the school is giving her a lot of need based money.

She does not qualify for Pell or SEOG. She did receive a grant and work study and a few other scholarships from the college. Our EFC is high already and I don’t want the money from the 529 or my Mom’s gift to affect the need based money we are receiving. The purpose of the 529 and the money from my Mom was to help meet the needs of our EFC.

It’s best to organize it as suggested above, with most of the money being gifted to you and H and then you pay the school. Then it is a non-event as far as FAFSA goes. She will have to report any money from the 529 and money paid directly from her grandmother as ‘money received or paid by others’ on the FAFSA. Depending on how much other money she’s earned or received, it may affect her work study. Whether it changes the other ‘scholarships’ will depend on whether they are need based or merit.

It’s worth doing the double step to get the $15000 from grandmother to you to school. However, I don’t think it will change all that much if you have $3000 from the 529 on the fafsa and I don’t really see another option unless you transfer the 529 to you or daughter and then the entirety of it will be assessed at 5.6% for the FAFSA. If she loses work study, she can always get another job on campus. Work Study is better, but not horrible if she loses it. If your EFC is already at $37000, then increasing it to $38000 will probably not make much of a difference. Most schools don’t award WS for EFC that are that high.

Thank you everyone for your help and advice, greatly appreciated!