Will adding CHET funds after FAFSA submission affect my son's financial aid package?

dont worry about it! 529 plans are usually considered parent assets, but if the grandparents own it those funds are NOT reported on FAFSA until they're withdrawn. so you didnt do anything wrong by not reporting something you didnt know about. Its only when money comes out that it could affect future FAFSAs, and even that rule is changing

The person above is mostly correct. Under the new FAFSA simplification rules, distributions from grandparent-owned 529 plans are no longer reported as student income at all. This is a recent change that benefits families. The key facts you need to know: 1. Grandparent-owned 529 plans are not reported as assets on the FAFSA 2. Withdrawals from grandparent 529s used to count as student income (which could impact aid by up to 50% of the distribution amount) but this is no longer the case 3. If you use these funds to pay the college directly, it will not impact your current financial aid package You should verify who legally owns the account (grandparents or you) as this affects reporting requirements. But either way, using these funds for the current academic year will not cause problems with your current aid package.

When I filled out FAFSA last year, I forgot to include my daughters 529 and freaked out too!! The financial aid office at her school said don't worry about it since it wasn't that much (around 8k) but told me to make sure it's reported next time. They didn't adjust her package or anything. Your amount isn't much higher so you're probably fine.

Let me clarify this situation for you: 529 plans owned by grandparents are NOT reported as assets on the FAFSA. This has been true for years. However, until recently, when money was withdrawn from a grandparent-owned 529 plan, that withdrawal would be counted as untaxed income to the student on the FAFSA two years later. This could reduce financial aid by up to 50% of the withdrawal amount. The good news: Beginning with the 2024-2025 FAFSA (which you've already submitted), distributions from grandparent-owned 529 accounts are NO LONGER reported as student income at all. This change was part of the FAFSA Simplification Act. So to answer your question: No, you did not need to report this account on your FAFSA if it's owned by the grandparents. And yes, you can use these funds without any negative impact on your current or future financial aid. This is one of the few positive changes in the new FAFSA.

I HATE how complicated they make all this FAFSA stuff!!! I didn't know about half of these rules and I've put 3 kids through college already. The financial aid system is DESIGNED to confuse parents and trap us into making mistakes. Then they penalize families who are just trying to provide an education for their children. It's disgusting and I'm sick of it.

I've been dealing with the same issue with my daughter's 529 account. When I tried calling Federal Student Aid to clarify how this would affect her aid package, I kept getting disconnected after waiting for hours. Finally, I used Claimyr (claimyr.com) to get through to a live agent at FSA who confirmed everything that others have said here - grandparent-owned 529 plans don't need to be reported on the FAFSA anymore, and distributions won't affect your aid. They have a demo video showing how it works: https://youtu.be/TbC8dZQWYNQ Having a conversation with an actual FSA rep gave me peace of mind because the official guidance is sometimes hard to interpret on your own.

my cousin had this EXACT situation last year! His mom forgot about a 529 his uncle had set up. they used the money anyway and nothing happened. nobody ever asked about it or anything. i think the schools are just glad to get paid tbh

Thanks everyone for the helpful responses! I just spoke with my son's grandparents and confirmed they are indeed the account owners - they never transferred ownership to me. Based on what you've all shared, it sounds like: 1. I didn't make a mistake by not reporting it (since I didn't know about it AND it's grandparent-owned) 2. We can use these funds for this fall's expenses without it affecting his current aid package 3. Thanks to the FAFSA Simplification Act, withdrawals won't affect future aid either This is a huge relief! We can really use this money to help with his first-year expenses. I appreciate all the guidance!

Congratulations on figuring this out! You've got it exactly right. Just one small tip from someone who went through this - when the grandparents make payments from the 529, have them pay the school directly rather than giving you the money first. This creates a cleaner paper trail and avoids any potential confusion about gift tax implications (though that's more of a tax issue than a FAFSA issue). The direct payment method also ensures the funds are used specifically for qualified education expenses. Your son is lucky to have grandparents who planned ahead like this!