ISO advice on whether to fill out the FAFSA form - 529 in grandparent's name FBO the grandchildren

[Anonymous]

I welcome advice on the situation below.

1. We have 3 kids (ages 12-19).

2. When our kids were born, my mom was very generous to set up a 529 for each of the 3 kids. She told us about each 529 when she set it up, and seemed proud/happy to be doing this for her grandchildren. (These are her only grandchildren.) Each 529 is in her name and for the benefit of each of the 3 kids. I do not know the exact amounts of these (as my mom doesn't share the info, and I do not ask), but I believe each account has at least $225,000. (She "super-funded" each account at the time when each of our kids was born, and the stock market has done well.) My DH and I have no access to these accounts.

3. For our oldest (DS1)(now a college freshman), we did not complete the FAFSA form. Our DS is a mediocre student (3.25 and 28 ACT), and so we hoped that it might help him that he did not fill out the FAFSA form. (He did get into quite a few middle-tier schools. A few of the schools would have required that he start in the spring, and so he barely got in but did. (He did not get into - nor did he apply to - the U of Maryland.) A few of the schools even offered him a little bit of merit aid even though we did not fill out the FAFSA form.

4. When it came time to write the first tuition check for my DS, I talked to my mom and asked if we could start to tap into the 529. (I told her that the total price for freshman year would be $50,000.) She said sure, and that she would cover tuition/room/board. She grumbled a bit about the price, and hinted that perhaps she might need the money in the 529 for her own living expenses, down the road. This was kind of a shock and was the first time I had heard any notion that she might need the money for her future expenses. Then she assured us that she'd cover tuition/room/board for a college, but that our younger 2 kids should also (of course) try for merit scholarships.

5. Our middle child (DD) is now in 11th grade. She is a better student than our DS (mostly A's, lots of APs, and a 1350 on the SAT). Unlike with our son, we're not worried about her getting into a college. We think she'll be a contender for some good colleges. But we wonder if if would help her if we avoided filling out the FAFSA.

6. Despite my mom's wobbling, I do think that she'll end up paying tuition/room/board. At the same time, I want to minimize the burden on her. She lives a UMC (or slightly lower) lifestyle, and has been very savvy with her investments.

7. I want to mitigate the burden on my mom, and figure I could do that by completing the FAFSA. My DH and I were both federal employees for a long time, but our HHI recently got to $450K. (Granted, my DH is in a commission (not salaried) position -- he is in a field where the compensation is totally dependent on the business he brings in.) We have good amounts in our 401(k)(TSP) accounts. However, we do NOT have any taxable accounts or other assets. We literally only have our 401(k)s and home equity.

8. Because the 529s are in my mom's name FBO my kids, I'm curious if I must disclose that on the FAFSA? My DH and I definitely do not control that money. We are dependent on my mom to take the money out (which she has done for my DS so far this year).

9. If we do need to disclose the 529s that my mom has set up, then I figure that I will not do the FAFSA for my DD. However, if we do not need to disclose the 529s that my mom has set up, do you think we should fill out the FAFSA? We are trying to build up more of a cushion of savings (in a taxable account). But at the moment, we only have our 401(ks)/TSP and our home equity. Even with our decent HHI, I would guess we might qualify for some discount in tuition?

Thanks and I welcome any thoughts on this situation.

[Anonymous]

Your HHI is going to preclude aid whether or not you fill out a fafsa

[Anonymous]

1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

[Anonymous]

Anonymous wrote:1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

OP here. Thank you for this feedback. I did an online expected price calculator for one private college to which my daughter plans to apply. It made it seem like we'd get a discount of $20,000 per year off of tuition. (Total cost would otherwise be $80,000 per year.) Do you think that the online expected price calculator is not reliable, as it does not have all the facts?

[Anonymous]

Anonymous wrote:

Anonymous wrote:1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

OP here. Thank you for this feedback. I did an online expected price calculator for one private college to which my daughter plans to apply. It made it seem like we'd get a discount of $20,000 per year off of tuition. (Total cost would otherwise be $80,000 per year.) Do you think that the online expected price calculator is not reliable, as it does not have all the facts?

There are some colleges that give a big discount to nearly everyone so it likely is accurate as long as your student is on the higher end of admitted students in GPA/tests. They could end up with more if they are a particularly desirable student.

Family contribution is mostly driven by income. You aren't going to get need-based aid anywhere. FWIW, our HH income is about $250k and our EFC was about $60K. When we ran the net price calculator at highly selective schools that don't give merit aid, we were still expected to pay the $80K price.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

OP here. Thank you for this feedback. I did an online expected price calculator for one private college to which my daughter plans to apply. It made it seem like we'd get a discount of $20,000 per year off of tuition. (Total cost would otherwise be $80,000 per year.) Do you think that the online expected price calculator is not reliable, as it does not have all the facts?

There are some colleges that give a big discount to nearly everyone so it likely is accurate as long as your student is on the higher end of admitted students in GPA/tests. They could end up with more if they are a particularly desirable student.

Family contribution is mostly driven by income. You aren't going to get need-based aid anywhere. FWIW, our HH income is about $250k and our EFC was about $60K. When we ran the net price calculator at highly selective schools that don't give merit aid, we were still expected to pay the $80K price.

That is very helpful information. So it sounds like it may be worth filling out the FAFSA if she plans to go to a college that is not uber-selective. On the other hand, maybe she'd have a better chance of getting admitted if we just did not fill out the FAFSA and paid the extra $20,000 per year.

BTW, that is surprising that the family contribution is driven by income. That seems kind of insane, as income can change at any time. You'd think they'd look at assets. But then again, maybe high HHI and low assets suggests someone who just spends a lot of $$. That's not the case for us, as we are only very recently at this higher HHI.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:1. You do not have to disclose the grandma's 529 on FAFSA. As you said, she is in control and can change the beneficiary or close the account at any time, so it's not your kids money until she actually pays.
2. It used to be that grandparents paying tuition will come bite you back in terms of financial aid next year. The rules have recently changed, but I don't remember when the new rules go into effect, may be 2023-24.
3. If your HHI is $450K, you will not get any FA from FAFSA. You will most likely not get anything from schools who use CSS or their own form either.

OP here. Thank you for this feedback. I did an online expected price calculator for one private college to which my daughter plans to apply. It made it seem like we'd get a discount of $20,000 per year off of tuition. (Total cost would otherwise be $80,000 per year.) Do you think that the online expected price calculator is not reliable, as it does not have all the facts?

There are some colleges that give a big discount to nearly everyone so it likely is accurate as long as your student is on the higher end of admitted students in GPA/tests. They could end up with more if they are a particularly desirable student.

Family contribution is mostly driven by income. You aren't going to get need-based aid anywhere. FWIW, our HH income is about $250k and our EFC was about $60K. When we ran the net price calculator at highly selective schools that don't give merit aid, we were still expected to pay the $80K price.

That is very helpful information. So it sounds like it may be worth filling out the FAFSA if she plans to go to a college that is not uber-selective. On the other hand, maybe she'd have a better chance of getting admitted if we just did not fill out the FAFSA and paid the extra $20,000 per year.

BTW, that is surprising that the family contribution is driven by income. That seems kind of insane, as income can change at any time. You'd think they'd look at assets. But then again, maybe high HHI and low assets suggests someone who just spends a lot of $$. That's not the case for us, as we are only very recently at this higher HHI.

If you are looking for merit aid, you could ask the schools if they consider/require FAFSA in awarding that. Some will but from my research most won't. Merit aid is part of their strategy in attracting higher-stats students.

[Anonymous]

I think you need to have a heart to heart conversation with your mother. 3 educations is expensive and you need to know if/when you will have to contribute. Are you an only child? If your mother requires skilled nursing care, does she have the money? At $450,000 you will not receive any federal money.

[Anonymous]

Anonymous wrote:I think you need to have a heart to heart conversation with your mother. 3 educations is expensive and you need to know if/when you will have to contribute. Are you an only child? If your mother requires skilled nursing care, does she have the money? At $450,000 you will not receive any federal money.

+1 The secrecy seems really weird. She set these up for her grandkids. You need to understand, in advance, what the budget is. Does she understand the penalty she will pay if she decides she wants this money for her own expenses?

[Anonymous]

Some schools require filling out FAFSA to qualify for merit scholarships.

[Anonymous]

At $450k (even if that is recent), can you not cash flow tuition? Our HHI is around there and we save over $100k/year after 401(k) contributions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think you need to have a heart to heart conversation with your mother. 3 educations is expensive and you need to know if/when you will have to contribute. Are you an only child? If your mother requires skilled nursing care, does she have the money? At $450,000 you will not receive any federal money.

+1 The secrecy seems really weird. She set these up for her grandkids. You need to understand, in advance, what the budget is. Does she understand the penalty she will pay if she decides she wants this money for her own expenses?

Yes, she's aware of the 10 percent penalty. (She's very savvy about everything financial -- she had a long career in that world.) That's why I was surprised that she would mention wanting to possibly use that money. I think she has enough money to take care of herself long-term (and still leave a legacy), but she is of the view that talking about finances is gauche. So I always just kind of wonder.

[Anonymous]

Anonymous wrote:At $450k (even if that is recent), can you not cash flow tuition? Our HHI is around there and we save over $100k/year after 401(k) contributions.

This. OP you could easily “ease the burden” on your mother by actually contributing to your children’s college education, rather than looking for aid. I know you’d rather save, but these are your children.

[Anonymous]

Christ on a cracker- how are you at $450k/yr and not able to pay cash?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think you need to have a heart to heart conversation with your mother. 3 educations is expensive and you need to know if/when you will have to contribute. Are you an only child? If your mother requires skilled nursing care, does she have the money? At $450,000 you will not receive any federal money.

+1 The secrecy seems really weird. She set these up for her grandkids. You need to understand, in advance, what the budget is. Does she understand the penalty she will pay if she decides she wants this money for her own expenses?

Yes, she's aware of the 10 percent penalty. (She's very savvy about everything financial -- she had a long career in that world.) That's why I was surprised that she would mention wanting to possibly use that money. I think she has enough money to take care of herself long-term (and still leave a legacy), but she is of the view that talking about finances is gauche. So I always just kind of wonder.

Interesting. Sounds like a little bit of Emily Gilmore going on here. Not talking about numbers, but talking about "taking care of it".


My kid is a senior. He got merit aid at several places ranging from $1800 to $30,000.
There is a grandparent funded 529 that could help, but it is under $10,000. The grandparent passed and it was very difficult to access the account due to people being reluctant to share actual numbers and specifics. We did fill out the FAFSA and CSS forms.

You just never know when someone's generosity can wear thin, even if they have the best of intentions.

Your mom is kind of saying, "I have anxiety that I won't have what I need when get older, and I have done this huge thing to lessen your burden".

I wonder if you can reassure her that your future plans (when your kids fly the coop) include being there for her, in ways that she needs (financial, physical, emotional...).
She may be witnessing other friends who are feeling/being abandoned.

Can you set aside a small account for long-term care, and if she doesn't need it, you have it for your own future?