Greetings @donm1 :
In short: There is no way to guarantee that your help won't have any impact on their financial aid.
As a grandparent, you would minimize your impact on their EFC (Expected Family Contribution) by holding off on paying expenses until the second half of their sophomore year, as @dcandmc mentioned, but even then it's no guarantee you'll have NO impact:
- They also may not graduate on time- a 2014 study found less than a fifth of four-year students graduate on time. In this case the aid you contributed in their sophomore year would have an impact on federal aid going into their fifth year, though this can get messy, as federal aid itself may diminish as students go beyond the fourth year.
- The school may have its own unique financial aid calculations, use more comprehensive financial aid assessment methods than the federal aid formula (the CSS profile is particularly popular with private institutions).
- Financial aid formulas may change (as they recently did to the "prior-prior" method).
The best thing you can do is limit the amount your grandchild needs to borrow, because it is almost always less expensive to pay for expenses with savings than to have to borrow.
Brian Boswell VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.