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I was not able to get through to Mr Baldwin, but I found another article by him that expands on the topic. Here's a partial copy:

"Paying for College: Help from Grandparents
By William Baldwin, Forbes Magazine 2/28/2013

Thinking of helping out a grandson or granddaughter? Structure your gift so that it doesn’t mess up the student’s financial aid.

If a grandparent, uncle or aunt sends money to the student to help pay for tuition, the gift will show up in the following year’s financial aid application as “untaxed income.” That income will be assessed at a rate of roughly 50%. If you give $1,000, the college will snatch $500.
This untoward result also occurs when the generous relative sends the money directly to the college billing office.

Making the gift well in advance of college doesn’t entirely solve the problem. Savings held by a student get assessed at a rate of 20% to 25% per year. So if the kid has an extra $1,000 set aside before applying for aid, his aid will come out $200 to $250 lower.

Making the gift to the student’s parents is smarter, but still, the timing has to be right. If the parents have the money in hand when the aid application is submitted, it gets counted as a parental asset and is assessed 5% to 5.6%.

There are two ways for a grandparent to be generous to a current college student without having a gift snatched by the college.

Method I: Wait until the aid has been determined and the family gets a bill, then send money to the parents. Also, don’t send more than a year’s worth of help at a time.

Method II: Wait until the student has graduated, then make a gift to the student to help pay off college loans."

Sounds like good advice, so I'm going with both Method I and II.

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