<p>a 529 plan stays in the donors name- so it doesn't look like it would affect financial aid the way that money given to the student would
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The best way is to contribute to a 529 plan. Your grandson can use the money tax-free for college and you may get a state income-tax deduction for your contribution. You can open the account in whatever state you prefer -- even if the child already has another account elsewhere.</p>
<p>You maintain control over the account until the money is withdrawn and can switch it to another grandchild (or other relative) if that grandson doesn't go to college. Because a 529 is in your name, it has much less of an impact on financial aid than money in your grandson's name, such as a custodial account or an education IRA. For more information about 529 plans, see The Best 529 Plans and 529 FAQs.</p>
<p>If your grandson is about to start college soon, think twice before giving him money directly -- that could make it tougher to qualify for financial aid. Writing a check in the last two years will have less of an affect than giving money before he starts. Or you could wait until after your grandson graduates and give him money to help pay off his loans -- which won't affect financial aid at all.
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