Should grandparents open their own 529 or contribute to the parent's 529?

Both work, and thanks to recent FAFSA changes the aid downside of grandparent-owned 529s has largely disappeared, since distributions from them no longer count as untaxed student income on the FAFSA. A grandparent-owned account gives grandparents full control, keeps the money out of the parents' asset picture, and can be a clean estate-planning vehicle, including superfunding five years of gifts at once. Alternatively, gifting into the parent's existing 529 is simpler and may capture the parent's state tax deduction. Watch coordination on withdrawals and any state recapture rules. If a school uses the CSS Profile rather than only the FAFSA, grandparent assets and gifts may still be scrutinized, so confirm which forms the target schools require.