Withdrawals from 529 plans owned by grandparents will still count as student income – money the student has earned or was given outside of savings listed on the FAFSA – but they won't impact a student's financial aid as much as a direct tuition payment would.
"Bottom line, when grandparents get involved in education planning there are many factors to be considered," O' Brien says. "Discussing various strategies and their implications with a qualified professional is advisable."
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.