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Another plus of 529 plans is that the money can be used for tuition as well as fees, room and board, books and other supplies. Also, you, the grandparent, maintain control over the money in

a 529. In the event of an unexpected major financial event, you can still use the money for your own purposes if necessary. If you do, though, you’ll have to pay a 10 percent penalty on the

account’s earnings, as well as federal income taxes and possibly state or local tax. “It gives you a little bit of flexibility in case you need that money in the future,” McDonald says. A

coming change in the FAFSA (Free Application for Federal Student Aid) form can make it easier for grandparents to help fund their grandchildren’s higher education with a 529. Beginning in

the 2024-25 award year (the revised FAFSA form will be available in December), distributions from a nonparent-owned 529 will no longer be counted as income to the student. Currently, the

FAFSA counts 50 percent of student income toward the expected family contribution (EFC) calculation. Grandparents can also choose to fund a large gift up front in a tax-friendly way. A 529

plan allows contributions equal to five years’ worth of gifts to a single beneficiary in a single year without triggering the federal gift tax. The maximum contribution eligible for the

five-year election for individuals is $85,000 and $170,000 for married couples for 2023. WRITE A CHECK DIRECTLY TO YOUR GRANDCHILD Writing a check directly to your grandson or granddaughter

to use to pay for college is another option. But it’s not one that most personal finance pros recommend. One downside is you run the risk of your grandkid using the money for something other

than tuition. As much as we love our grandchildren, trusting an 18-year-old with a large lump sum is probably not a risk you’re going to want to take, McDonald says. “I think you’ll want to

keep a little control of where your money goes,” he says. If you cut a check, you’ll want to make sure it’s for less than $17,000, or $34,000 for married couples, to avoid the gift tax.

Writing a check directly to your grandson will be considered income to the potential student and, as noted above, will impact financial aid eligibility for the 2023-24 aid year. The new

rules about cash support start with the 2024-25 aid year. Experts say helping out with college costs isn’t just about tuition. You can also chip in by helping pay off debt your grandkid has

from student loans, McDonald says. Knocking out loan debt enables your granddaughter or grandson to avoid high-interest expenses and the cash-flow-draining cost of monthly payments having an

adverse impact on their financial aid. “They get the double benefit,” McDonald says. Since they’re out of school, there are no financial aid forms to fill out anymore. “By helping them pay

for their student loans after they have graduated, you’re doing so without having an adverse effect on their ability to get the maximum financial aid that’s available to them,” McDonald

says.