Physician's Money Digest, May 15 2003, Volume 10, Issue 9

If your parents want to help withcollege education expenses for yourchildren, you need to be careful;money that goes to you or to thechild will figure into the financial aidformula and may lower any aid youmay be eligible for. A better idea isfor grandparents to pay tuition andother college bills directly to theschool, but only after the financial aidpackage has been hammered out;otherwise, the college will treat thepayment as if it were a scholarshipand lower the amount of aid. Sincethere's an unlimited gift tax exclusionfor tuition payments, this can also bea good way for grandparents to chipaway at the size of their estate withouttriggering any gift tax liability.