WV- I think you need to run a few of the price calculators on college’s websites to get a handle on your situation.
There is a difference between your mom owning an asset- a bond, worth 40K for the sake of argument- which is a reality which you do not need to divulge on your financial aid applications, vs. your mom GIVING you 10K per year for four years, which is a reportable event on your application (if she gives it to you a month before you file your FAFSA it will show up as 10K in your checking account, or 10K in a money market account, or whatever). The financial aid calculation does not distinguish between cash you own which you intend to use to pay for college, vs. cash you own which you intend to use to go to Paris for the week. Cash is cash and you will have to report that you own it.
I do understand what you are saying (I think) which is- given the choice, what is the most efficient use of the money your grandparents saved for your kids education (correct me if this is not your question).
So if the bonds really are in your mom’s name and are her property- it might be the case (obviously i don’t know your exact situation, but this is a hypothesis for you to test) that keeping them in her name, applying for financial aid, presumably getting the maximum award which is likely to include loans, and then having your mom help your kids pay off the loans on an accelerated timetable with the funds from the bonds once you’ve sold them, is the best use of the funds. If they really are in the kids names- depending on how the bonds are registered and held- you won’t have that option- you’ll have to report them as your kids assets.
But in no case will a college expect you to liquidate the bonds all at once to pay for Freshman year; whether they are your assets or your kids, only a percentage of the value is assumed to be “available” to pay your share.
Am I close to answering your question or have I misunderstood something here? And you absolutely need to see the physical bond (or a statement if they are being held in a brokerage account) to make sure you are dealing with accurate information. A grandparent telling you “the bonds are for you and your kids” doesn’t mean that bond is actually registered to your kid (or likely- in a custodial account since your kids are minors).
What taxes have you been paying on the bonds up until now and in whose name? That’s a place to start if you don’t physically have a certificate in your possession…