It is often more advantageous for parents to own the 529 plans for their students, rather than other family members. (Remember, the parents’ assets are assessed at 5.64% above the asset protection allowance, meaning a $10,000 529 plan balance would increase EFC for the FAFSA by a maximum of $564. Accounts owned by the grandparents don’t need to be reported as assets, but when they are used, the funds count as student income which is assessed at 50%, so that same $10,000 would result in a $5,000 increase in EFC.)

But what if Grandma wants to get the tax deduction for 529 plan contributions? For Oregon residents using the Oregon College Savings Plan, any contributor can take the tax deduction for their contribution, even if they aren’t the account owner. So if Grandma contributes to Junior’s 529 plan that is owned by Mom and Dad, she can still take the tax deduction for her contribution. She just needs to make the contribution directly to the plan (and keep a copy of the canceled check for her tax records). Non-Oregon residents should check with their state’s plan to see if this is the case with your plan too.