<p>‘rentof2 is correct; FAFSA doesn’t require grandparent-owned 529s to be reported. In my case, my sons’ grandparents live in a state that allows a state income tax deduction of up to $2500, so it’s a win-win for them to set aside $2500 in a state-sponsored 529. My own state isn’t nearly as generous.</p>
<p>Any parent- or child-owned 529s are assessed by FAFSA at the rate of 5.6%. What this means is that if there is $10,000 in the 529, $560 of it is expected to be used for that year’s qualified educational expenses.</p>
<p>State universities typically require FAFSA to be filed, so parent and child 529s would be reported.</p>
<p>If you were told by a college that they assess 529s at the rate of 12%, then they’re probably using the Profile form and can assess 529s however they want.</p>