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

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

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[quote=Anonymous][quote=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.[/quote]

This is wrong.  Grandparent 529 distributions are on line 44i on the FAFSA.

However, you don't include it on freshman year FAFSA.  Rather, you report the prior year distributions to the specific student on their sophomore to senior years on line 44i.  Read the instructions for line 44i -

"Money received, or paid on your behalf,  also  includes  distributions  to you  (the  student  beneficiary)  from  a  529  plan  that  is  owned  by  someone other  than  you  or  your  parents  (such  as  your  GRANDPARENTS,  aunts, uncles,  and  non-custodial  parents).  You  must  include  these  distribution amounts in question 44i"

https://studentaid.gov/sites/default/files/2022-23-fafsa-draft.pdf[/quote]

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