That money is not just scot free.

My understanding is that it is in their name you have to declare it. That is why it is better for parents to set it up instead of grandparents (i.e. parental assets are treated more favorably than child assets in the family contribution calculation). So, I would not say that your mom was THAT savvy about how to set things up. Though she sounds very generous.

OR you will have to declare it as a gift the following year.

You can't just use it and pretend you do not have it.

Come on.

My family is not big on talking about money either. My parents did set up a 529 for my kids and they send me the annual statement so we know what is in it. We don't have to have a big discussion about it but we know the status. That doesn't help you if your Mom decided to repurpose the money but maybe just asking her to send you the statement will make her feel less awkward.

My family is not big on talking about money either. My parents did set up a 529 for my kids and they send me the annual statement so we know what is in it. We don't have to have a big discussion about it but we know the status. That doesn't help you if your Mom decided to repurpose the money but maybe just asking her to send you the statement will make her feel less awkward.

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

Very, very, very few do. Rather than fill it unnecessarily, best to just check with the schools you are applying to if there is any doubt.

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.

Of course HHI should count. How much you earn determines how much you should pay. At 450K, you should be able to pay full price. If your mom comes through, bonus! FAFSA has to be filed every year , so if income changes, that will be reflected. Also, if income has changed recently, you can note that on the form.

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.

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

Reading comprehension much?

This is about "money received or paid on your behalf", not the money that someone may or may not pay in the future. That's why it's not on freshman FAFSA, you only report the money that the grandparents already paid. If the grandparents did not pay anything in freshman year, there will be nothing on sophomore FAFSA either.

And see my #2 - this will become irrelevant soon. So, for people who expect partial payment from grandparents, it makes sense to push it off to later years because soon it won't be reportable.

OP here. Thanks to all for these incredibly helpful comments, especially 12:13. These comments are giving me insights that I did not consider previously.

And as for lessons learned, we hope to be able to provide college tuition for our (future) grandchildren. We'll make sure not to over-promise and under-deliver, and will communicate regularly (rather than once at birth, and then basically waiting 18 years to bring it up again).

(Having said that, I do believe my mom will follow through (even insist) on providing college tuition/room/board for 4 years for all 3 of her grandchildren (e.g. my kids). (If DH and I refuse it (not ideal at this point for DH and me as we had thought that the 529s for our kids were voluntarily fully funded), she may even balk at our refusal.)

As an aside, this is why, when my inlaws wanted to set up a college fund for my kid, I politely told them that I'd prefer that they contribute to the one we'd already set up (and that they should feel free to deduct from the amount they wanted to contribute any state tax benefits they'd be losing by contributing to our account). It is *our* responsibility to pay for our daughter's education. I have no reason to think that they would have backed out, or played games . . . but they have multiple other similarly-aged grandchildren whose parents make far less than we do. I didn't want to be in a position where funds I'd been relying on were suddenly yanked. For planning purposes, I was going to ignore any college funds not under our direct control, but that likely would have resulted in significant oversaving.

Not criticizing, OP - it doesn't seem like your mother would have been amenable to that, and it's all worked out in the end. But I have known numerous other parents who relied on others to pay for their kids' college, only to find that either the promises wee conveniently forgotten or the money had been repurposed.

I think grandma may very understandably be reeling from sticker shock.

If she hasn't been paying attention she may have had NO IDEA that private schools were charging $70,000 a year for tuition, room and board. She may have thought is was closer to 40,000 and may have basically been thinking that say $160,000 of what she had saved for each child would be more than enough, and then the remaining $65,000 would remain for her own use. Or whatever she was thinking. She probably just thought she had plenty extra in there, even with the penalty.

Anonymous wrote:

Anonymous wrote:Most people put together financing from different sources. It is entirely possible that grandma did not anticipate tuition increasing at the pace that it has. Can't you pay for at least half out of current income, take the other half from grandma and have each kid take a federal student loan and/ or work for incidentals?

+1

This. If you have three kids, did you not foresee needing to pay three tuitions, OP???

Not defending OP at all, but OP did say that each of the 3 accounts was at least $225,000. So that's a total of $675,000 in 529s. Sounds like the grandma told her at birth that she'd pay for college for the 3 grandkids with these 529s, but the grandma is now pulling back on that a little bit.

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.

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

JFC, $450k HHI and grandma pays for Kid 1's tuition and OP is still hoping to game financial aid for Kid 2 by hiding the 529 funds because she has NO OTHER ASSETS besides retirement and home equity. Yes OP, go right ahead and find a way to scam the system to avoid paying full freight. My heart aches for your suffering.

Anonymous wrote:Most people put together financing from different sources. It is entirely possible that grandma did not anticipate tuition increasing at the pace that it has. Can't you pay for at least half out of current income, take the other half from grandma and have each kid take a federal student loan and/ or work for incidentals?

+1

This. If you have three kids, did you not foresee needing to pay three tuitions, OP???

Most people put together financing from different sources. It is entirely possible that grandma did not anticipate tuition increasing at the pace that it has. Can't you pay for at least half out of current income, take the other half from grandma and have each kid take a federal student loan and/ or work for incidentals?

Given your big financial picture your kids should be going to cheaper state schools.