Well, we received our first tuition bill today. Gulp.
We are a full pay family this year who did not submit a FAFSA/ CSS profile this year but intend to do so next year.
Based on your (posters’) advice, my husband’s additional readings, and his chat with the college about how to make 529 payments, we decided to pay the first bill using our son’s personal bank account and part of our 529 savings.
The most important thing seemed to be for our son to use up his own money first, since, for financial aid purposes, they would expect him to contribute 20% of his savings, whereas we are expected to contribute less than 6% of our assets. So we need to decrease his savings before we decrease ours.
Then we used some money from our 529 for the remainder. 529 vs. our bank account did not seem to matter in terms of future aid (both are assets), and we figured the money in the bank was useful in case the roof springs a leak or something!
We are saving the grandparents’ 529 for senior year. Their money is not reported for the financial aid forms, UNLESS we use it before filing, in which case it will count as a gift to him and count as income, messing up the chances for aid. Therefore, it is best for them to reduce our burden after we have received some aid.
Just sharing this in case anyone else is working on the same set of decisions!