When I first started saving for my kid’s college education, we were advised to put the savings in their name. At the time, this seemed like great advice. As the decades passed, this information was proved to be horribly flawed. As pointed out in the recent NY Times article: “The Best Way to Help a Grandchild with College” , the following facts are really important to know:
20% of a students’ assets are “assessed” in the federal formula for financial aid compared to only 5.64% of parental income and non-retirement assets. The more money in the child’s name the less the financial aid package.
“When” a grandparent takes distributions from a 529 for a grandchild is also a key factor
Also, things are different for those dealing with estate planning and tax laws.
Grandparents love their grandchildren and when they can help out with college it is a great gift.
There are many considerations that can save thousands of dollars when paying for college, when using 529 plans or other savings.