New FAFSA Favors Grandparent College Giving

This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article discussing changes to the 2024–2025 Free Application for Student Aid (FAFSA) that allow grandparents to help with college expenses without affecting financial aid eligibility based on the FAFSA:

Helping a grandchild obtain a college degree could be a lifelong gift, but grandparent giving has often required fiscal gymnastics to avoid reducing a student’s financial aid eligibility. That is changing with the 2024–2025 Free Application for Student Aid (FAFSA), which opens in December 2023.

The changes apply to any gifts from grandparents, including distributions from grandparent-owned 529 plans, which offer tax-free growth when funds are used to pay a beneficiary’s qualified education expenses.

Distributions and Gifts No Longer Counted

Under the old rules, grandparent gifts and grandparent-owned 529 distributions were counted as untaxed student income and assessed at 50% when calculating student resources, which would typically reduce a student’s financial aid award. The new FAFSA will no longer include a question about gifts from grandparents and will draw student income information solely from the student’s tax return, which would not include gifts or 529 distributions.

This means that grandparents will be able to help with their grandchild’s college expenses without affecting the student’s eligibility for financial aid based on the FAFSA. Keep in mind, however, that grandparent gifts and 529 distributions will likely continue to be…

To Read the Entire Article, Please Click Here.

Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

Please let Craig know that the Green Bay News Network Sent You!