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529 SAVINGS INCENTIVE

CHANGES TO PLAN COULD BENEFIT GRANDPARENTS

Grandparents don’t have to worry about spoiling their grandchildren thanks to changes to the Free Application for Federal Student Aid (FAFSA).

A New York Times report noted that funds taken from grandparent-held 529 college savings accounts won’t affect a student’s eligibility for federal aid. The money will no longer be counted as untaxed student income.

The new FAFSA will also no longer include a question asking about cash gifts from grandparents.

The change likely won’t take effect until the 2024-25 school year, according to the New York Times, but the new FAFSA would be based on income from the tax year of 2022.

This is a potential big plus for grandparents who want to help their grandchildren pay for college – and students won’t miss out on the extra funds.

Other advantages of grandparent-held 529 plans, according to Forbes, include the funds being able to help cover college books and supplies, and internet access and room and board and the opportunity to change the beneficiary if needed.