FAFSA advice as a grandparent helping with 3 grandkids' college expenses

This is a great question! As a grandparent, your contributions actually have different implications depending on HOW you provide the support. Under the new FAFSA for 2025-2026, grandparent-paid college expenses no longer affect the student's SAI calculation directly, which is excellent news for you! Previously, these could reduce aid eligibility in subsequent years.\n\nSince you're a tax professional, I'll be specific: If you directly pay the educational institution (tuition, etc.), there's no FAFSA reporting requirement. If you contribute to a 529 plan that you own, withdrawals are no longer reported as student income on FAFSA. However, if you give money directly to your grandchild or their parents, and they report it as income on their taxes, it could affect their FAFSA.\n\nSince your grandson is already in college and your granddaughters will be applying soon, you might want to consider timing your contributions strategically. Have you set up 529 plans for any of them?

Thank you for such a thorough explanation! I had no idea the rules changed for grandparent 529 plans - that's a huge relief. I actually do have small 529 plans for each of them that I've been contributing to since they were little, but I've also been helping by writing checks directly to their universities for partial tuition payments. So it sounds like neither of these methods would hurt their aid eligibility? That's fantastic news!

jus wanna say ur a great grandparent for helping!! my grandparents didnt help at all with my college and now im 45k in debt lol. the 529 thing is right, my cousin's grandma has one for her kid and it doesn't count on fafsa anymore

Thank you for the kind words! I'm sorry to hear about your student debt situation - it's exactly what I'm trying to help my grandkids avoid. I feel fortunate that I'm in a position to help them, even if it's just covering a portion of their expenses.

Be careful about this!! My parents tried to help my daughter and it DESTROYED her financial aid package. The financial aid office counted their gifts as income and she lost almost $7,000 in grants!!! Make sure you talk to a REAL financial aid expert not just people on forums. The system is designed to PUNISH families who try to help eachother!!!

That sounds really frustrating, but it's important to note that the FAFSA rules have changed significantly. Prior to the 2023-2024 FAFSA, grandparent support could indeed reduce aid, but the 2024-2025 FAFSA and beyond no longer considers grandparent-owned 529 plans or direct tuition payments in the calculation. When did your situation occur? It's possible it was under the old rules.

It was for the 2022 school year so maybe that explains it. But I still don't trust the whole system. They're always looking for ways to give less money to students who need it!

Your grandkids are so lucky! Quick question - when you do their taxes as the volunteer preparer, do you also help with the FAFSA submission? I'm wondering if there's any benefit to having the same person handle both since they're so connected.

That's a good question! I actually don't prepare their taxes specifically (to avoid any conflict of interest since I provide financial support), but I do review them and offer guidance. As for FAFSA, I've stayed completely away from that process so far since I wasn't confident about how my contributions might affect things. But now that I understand more about the rules, I might be able to provide more guidance there too!

Since you're a tax professional, you might appreciate some of the technical details. The specific change that benefits grandparents was implemented when the FAFSA Simplification Act removed the question about

Thank you for these technical details - this is exactly the kind of information I appreciate! I hadn't thought about the CSS Profile considerations. My grandson's university does use the CSS Profile for institutional aid, so I'll need to look into how they specifically treat grandparent contributions. I've been careful to structure my gifts to avoid any gift tax implications, but I hadn't considered how the timing might affect their parents' reported income. Lots to think about!

I've been trying to get through to financial aid for days about a similar grandparent contribution question and can't get anyone on the phone. Keep getting disconnected or wait times of 2+ hours I can't sit through. Anyone know how to actually TALK to someone about these FAFSA issues?

I had the same problem last month trying to resolve a verification issue. I finally used Claimyr (claimyr.com) to get through to a live agent at Federal Student Aid. They basically hold your place in line and call you when they reach an agent. Saved me hours of frustration and actually got my issue resolved on the first try. They have a video that shows how it works: https://youtu.be/TbC8dZQWYNQ. Definitely worth it when you need to talk to an actual person about complicated situations like grandparent contributions.

THANK YOU! I'm going to try this today. I've been pulling my hair out trying to get someone on the phone.

also wanted to ask since ur a tax person - is it true grandparents can claim education tax credits if they pay tuition? my friend said its only parents or students who can claim those

Great tax question! Your friend is actually correct. Even though I pay some of my grandchildren's tuition directly to their schools, I cannot claim the education credits (American Opportunity or Lifetime Learning Credits). Those can only be claimed by the student or a parent who claims the student as a dependent. Since my grandchildren are claimed as dependents by their parents, only their parents can claim those education credits. It's a common misconception that whoever pays the tuition can claim the credits!

One more strategic consideration for your situation: Since your grandson is already in college and your granddaughters will be starting in the next 2-3 years, you might want to think about how to balance your support across all three.\n\nSince grandparent contributions no longer affect FAFSA calculations negatively, you have more flexibility. But remember that the timing of your 529 withdrawals can still impact other financial planning aspects. For instance, spreading out 529 withdrawals over 4 years rather than front-loading them might help with tax planning for the entire family.\n\nAlso, if any of your grandchildren are considering graduate school eventually, leaving some funds in their 529 plans for that purpose could be beneficial.

You've given me a lot to think about regarding the timing of my support. I hadn't considered the graduate school angle - my grandson is studying engineering and has mentioned possibly pursuing a masters, so keeping some 529 funds in reserve makes sense. I've been trying to keep my support roughly equal between all three grandchildren, but the different timing of their education needs does complicate things. Thank you for these strategic considerations!

Has anyone else noticed that the new \

Yes!! It took me three attempts to just get past the FSA ID verification step. And then when I finally got in, half the questions didn't match what was in the help documentation. Plus the website kept timing out. I'm seriously considering hiring someone to just fill it out for us next year.

As someone new to this community, I just wanted to say how helpful this entire thread has been! I'm in a similar situation as a grandparent wanting to help with education costs, and the clarity around the new FAFSA rules is exactly what I needed. The distinction between direct payments to institutions vs. gifts to families, and how 529 plans are now treated, removes so much uncertainty. It's also reassuring to see the tax expertise being shared here - the point about education credits only being available to parents/students even when grandparents pay tuition is something I wouldn't have known. Thank you all for creating such an informative discussion!

Welcome to the community! I'm also a grandparent trying to navigate the financial aid maze, and this thread has been incredibly enlightening. Sean, your situation mirrors mine almost exactly - I have two grandchildren in college and one starting next year. I've been so worried about accidentally hurting their aid eligibility with my contributions that I've been hesitant to help as much as I'd like to. Learning about the new rules around grandparent 529 plans and direct tuition payments is such a relief! I've been making direct payments to their universities for room and board expenses, and now I know that won't negatively impact their FAFSA. It's wonderful to see fellow grandparents sharing knowledge and supporting each other through this complex process. Thank you everyone for making this such an informative discussion!

As a new member to this community, I wanted to express my gratitude for this incredibly informative discussion! I'm also a grandparent (currently helping with two grandchildren's college expenses) and had been completely confused about how my contributions might affect their financial aid. The clarity around the recent FAFSA changes - particularly that grandparent-owned 529 plans and direct institutional payments no longer negatively impact aid calculations - is exactly what I needed to hear. Sean, your approach of being strategic about timing and structuring your support really resonates with me. I've been doing a mix of 529 contributions and direct tuition payments, but I was always worried I was somehow hurting their chances for aid. It's such a relief to know that under the current rules, these methods actually work in the students' favor. The technical insights about CSS Profile considerations and the distinction between different types of financial support have been eye-opening. I'm definitely going to review how my contributions might be viewed by schools that use institutional aid formulas beyond just FAFSA. Thank you all for creating such a supportive environment where we can share our experiences and learn from each other. This is exactly the kind of community resource that makes navigating these complex financial aid waters so much more manageable!