When children are young, relatives sometimes set up Uniform Transfers to Minors Act or Uniform Gifts to Minors Act accounts to save money for the future. They often do this as part of a tax or saving strategy. Sometimes families choose UTMA's or UGMA's rather than 529 plans when they are unsure the child will decide to attend college.
For financial aid purposes, UTMA's and UGMA's are considered the property of the child while a 529 plan is considered the property of the parent. The assignment of assets is important for financial aid purposes because student and parent income and assets are evaluated differently in financial aid formulas.
When the child becomes a teenager, circumstances can change and family members may be concerned about the eligibility of the child for college grants and scholarships. Certified Financial Planners can help families decide which strategy is best for them and what to do if they want to change strategies. Families interested in determining their present level of need can visit https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e2s1 and enter their information in FAFSA4Caster to obtain an estimate of the Estimated Financial Contribution the government will expect them to be able to contribute toward the educational costs for the college student in their family.