<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? Any other ideas?</p>
<p>Put the money in a 529 to cover the senior year of college, don’t use it until the summer before senior year and during senior year for payments that are allowed under 529 rules.</p>
<p>Isn’t all money given to help support the student reported on the FAFSA?</p>
<p>If there is money coming from outside sources to help pay, then the need-based financial aid is decreased because the NEED is decreased.</p>
<p>Lend the money to the student with notarized loan document, fair interest paid and charged and make sure that a separate document forgives the loan upon graduation or other time period. Also giving the money to the parents could work.</p>
<p>The grandparents can’t just write a check for what the financial aid won’t cover? </p>
<p>the grandparents money isnt reported when it is given to the parents as a gift…which in this case it would be. the plus loan is a parent debt so if grands pay it off, it is a gift to the parents…and not reported.</p>
<p>If the grands pay the school directly, then it is reported on fafsa because it is a gift to the child. so the grands either need to pay the parents or pay the loans. the grands can also pay off all child’s loans senior year.</p>
<p>Why have the parents take the PLUS loan? That incurs an origination fee and possible interest until paid. Just have the grandparent gift the money to the parents and the parents pay the tuition and fees. A loan to the student also works.</p>
<p>Wow, that’s silly, but it explains why my niece’s paternal grandparents gave her an envelope full of a large amount of cash and called it a gift. </p>
<p>The kid is supposed to report the money if it is gifted directly to her… that is why people are suggesting gifting it to the parents or loaning to the student.</p>
<p>^^
Money given to the child ((even if it’s cash) is supposed to be reported.</p>
<p>Money given to the parents is not reported.</p>
<p>Yes, forget the loans, just have the grands give the parents the tuition money… However, maybe the grands fear that if they give directly to the parents, the parents will spend the money and not use it towards tuition??? The grands could fix that in some way, such as requiring the parents to send in their check as the grands are depositing theirs.</p>
<p>Did I say she did not report the money? No, I did not! </p>
<p>She did not work at all and prior to getting the cash…which was given directly to her out of fear her father would spend it…she had zero of her own income. I’m sure her taxes and the effect on her next year’s FAFSA were minimal. </p>
<p>Sadly, money that grandparents give to some parents or some exes give to custodial parents don’t make their way to the schools.</p>
<p>You write up the loan papers for the kid and document it all and notarize it with standard legal documents, language and terms and pay the tution directly requiring evidence of satisfactory performance and registration for the term. This way you get burned for no more than one term. THat’s what some grandparents I now feel they HAVE to do. That’s in part, why the money from PLUS and other federal aid goes directly to the school. IF it makes a stop at a parent or kid’s bank account, it may not all make to the school’s bursar office. School gets paid first, and then anything left, the kid can use towards discretionary costs, and if he can keep them low enough, even have extra money left–beat the COAs. </p>
<p>Many folks insist on paying the vendor, the repair place, or whatever the money is for, rather than handing it over to the person. </p>
<p>For FAFSA purposes giving money to a student as unearned income may not have much of an effect as the formula is 50% of income over $6K or so. So a thousand or so in gift money, won’t make any difference unless the student is earning a lot of money, in which case, you can see it would go right on EFC. </p>
<p>With PROFILE schools, one has to be more careful. They do not have to stick to the 5.6% of assets of parents, 20% for students and 50% over $6K for students in income. No indeed they do not have to do so, and I know some top 25 schools that have some onery rules about that. Schools that meet full need as they define it. They may look at 529s a whole other way than the federal formulas do. That’s their call with their money. </p>
<p>Thanks so much for the great information and suggestions! Much appreciated.</p>
<p>In this case, the parents are trustworthy so a gift to parents would work. We are talking about roughly $15K per year.</p>
<p>This kind of information seems hard to come by…or maybe the family just hasn’t looked hard enough.</p>
<p>Thanks again.</p>
<p>My understanding is that instead of getting a PLUS loan and having the grandparents payoff the loan after graduation, the grandparents can draft a loan document and the loan directly to the grandchild and forgive the loan after graduation. This way you are not paying any originAtion fees or interest on the PLUS loan.</p>
<p>The other thing is that PLUS loan interest is pretty high, and interest stated on a private loan can be justifiably half that amount. </p>