529 accounts have limited effects on the need-based student aid calculation.

Vinni is poor but has worked hard through high school to save $10,000 for college. He finds out that student-owned assets are assessed at 20%, meaning the $10,000 threatens to reduce his financial aid eligibility by $2,000! Vinni asks his grandparents (or trusted neighbors) to start a 529 account in his name and transfers the $10,000 to that 529 account. Grandparent-owned accounts are assessed at 0% under the Student Aid Index (SAI) calculation, meaning the same $10,000 reduces financial aid eligibility by $0. Over 4 years of school at $20,000 tuition, books, rent, and food per year, this could mean an approximate $16,000 difference in student aid eligibility for Vinni.

During college, Vinni deposits his job money into the account and the proud grandparents deposit any tax deductions or credits they receive back from the state as a gift. After college, the grandparent-owners transfer the account ownership to Vinni for his further life-time use, including discounts on any loan repayments up to $10,000.