If a student currently receives need aid, does a 529 established by family members (not student’s parent) impact the need aid? We have two accounts that our older children did not use all the funds. We would like to change the beneficiary to our nephew who has one year remaining. If we make the change soon, can the account be used for this semester’s costs without impacting next year’s aid from the university. He has not received aid letter for next year yet.
I believe (double check) the answer is no …. until he actually receives funds from that 529. So the nephew does not report the amount in the 529 as an asset, but does report the gift “income” received on his next year’s FASFA income statement. What I’ve seen is that due to the two year delays in how taxes are reported, it’s best to use non parent 529 fund for Jr./Sr. year tuition if that possible / or take loans and then pay off the loans with 529 funds right after graduation.
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Your suggestion is interesting. He’s currently in his 3rd year. I believe FASFA application was submitted for fall 2026/spring 2027 in December but the family has not received any info back yet. So if I understand correctly, we can change the beneficiary to my nephew this year, but wait to distribute funds for his 2027 spring semester costs? If we distribute funds for fall 2026 costs, will that impact 2027 spring semester costs? Will the university change need aid mid year?
Just don’t change “ownership” to him. Beneficiary for someone who isn’t your direct kid isn’t reported as an asset. Again: please double check but I think this is correct.
Thank you!