One of the most effective tools for grandparents who want to help with college costs is a 529 Plan, a state-sponsored investment vehicle that allows assets to grow tax free when used for qualified higher education expenses. Plan funds can be used for more than just tuition. Required educational fees, certain room and board costs, books, supplies, as well as computers and related technology costs such as Internet access fees and printers can all qualify as expenses.

A student can be the beneficiary of more than one 529 Plan, so grandparents are free to open their own account — they do not have to contribute to the plan a parent may have opened. There are also benefits to grandparent-owned 529 Plans. When the assets are in the grandparents’ name, they are not counted in the federal financial aid calculation; therefore, if your contributions will only pay for a portion of your grandchild’s education, the assets won’t initially affect your student’s financial aid eligibility. However, once funds are withdrawn and used for college expenses, that money is considered income to the student for the financial aid calculation. Student income is counted at 50 percent, so a $5,000 withdrawal would reduce eligibility by $2,500. Beginning with the 2017-18 school year, the calculation will use prior-prior year’s income, so grandparent-owned 529 Plans can benefit a student for both the junior and senior years without negatively affecting financial aid eligibility. Assets can also be used for graduate school.

If you are in a fortunate position where you do not need your required minimum distributions for living expenses, you can direct those funds to a 529 Plan for your grandchildren. You can contribute up to $14,000 a year without incurring a gift tax or up to $28,000 for joint filers. You can also “super fund” a 529 Plan by contributing five years of contributions at once — $70,000 for single filers and $140,000 for joint filers — if you elect to treat the contributions as having been made over a five-year period. If your estate is large enough to be subject to estate tax, super funding a 529 Plan can be a good way to remove assets from your estate.

The downside to 529 Plans is that if funds are not used for qualified college expenses, you will likely owe federal and state tax and a 10 percent federal penalty on the earnings portion. But before you go down the path of making a non-qualified withdrawal, know you can change the beneficiary at any time as long as the new beneficiary is an eligible member of the previous beneficiary’s family.

While this is only one way for grandparents to help pay college expenses, the nuances and details can be overwhelming. While you can do it on your own, it is extremely beneficial to have the guidance of a tax professional or a financial adviser.