Helping them to avoid student loan problems
6 Ways Boomers Can Help Grandkids Pay for College
by Paige Estigarribia
If you are watching your small grandchildren running around the house now, it's probably hard to believe that the time will come when they head off to college. As a grandparent, there's a mixture of emotions. You are proud for sure, and you might even be a little sad to see them less. And you might be worried about your children's finances as they prepare to pay for your grandkids in college. According to the College Board, tuition and fees at four-year public institutions went up an average of 13% from 2010/2011 to 2015/2016. If you are worried about these costs, and you've decided that you'd like to assist your kids and grandkids, the tips below may give you some ideas for ways you can help out preparing for (or during) your grandkids' college endeavors.
1. You Could Fund a 529 Plan Completely
If you are unfamiliar with a 529 plan, according to the SEC website, it is a tax-advantageous savings plan geared towards saving up for college costs. Setting up and contributing to a 529 plan could be a great way to help grandkids with college expenses.
As a rundown on a few of the basics, the IRS website explains that the earnings from a 529 plan aren't subject to taxes when they are used for qualified education expenses of the beneficiary. Any contributions to the plan aren't deductible and contributions can't exceed the amount necessary to provide for qualified education expenses of the beneficiary.
Keep track of your contributions if you choose to set one up for grandkids. Consider talking to a financial advisor about the types of expenses that the plan can be used for. Plus, remember that depending on how much you contribute, there also could be gift tax consequences to your contributions.
2. Share Funding a 529 Plan with Their Parents
If you can't fully fund a 529, you could definitely partially contribute to one set up for your grandkids. Talk with your kids about setting up a college investment plan, so that all of you can contribute periodically towards college expenses. If everyone works together towards college, it will lighten the load when the time to pay tuition comes.
3. Put Away Small Amounts When They Are Small
Even if you can't contribute regularly to a big plan, you might try putting away small amounts starting when kids are small. If you start early, you'll be surprised at how much can accumulate by the time the college years arrive.
4. You Could Offer to Cover a Portion of Costs
If your grandchildren are headed off to school soon, and you want to do something to help out, maybe offer to pay for a certain part of school expenses. Examples might be sending money or grocery store gift cards to help with food or offering to help pay for rent. Even covering auto insurance, a cell phone bill, or another regular, routine monthly cost could be a big help to a college student just learning to manage their own expenses and budget.
5. Help with Moving, Laundry, College References, Care Packages, or Other Services
If you can't afford to financially contribute, helping with moving, laundry, or care packages would be great ideas. I loved receiving care packages from my grandmother while away at college, and I also loved when she visited and helped me wash and fold all my laundry! You can also think about using your contacts to help with references or part-time jobs if they need either of those.
6. Pass Along Gently Used Furnishings and Household Items
Remember your college bound grandkids if you are shedding household items. College kids, especially if they are living off campus, might need extra furnishings and kitchen items. So before you donate it, why not call your grandchild headed off to school to see if he/she could use it? Maybe they need a coffeemaker and you have an extra. Or maybe those dishes in the back of your cabinet could be put to good use!
It's exciting when a grandchild heads off to school! As a grandparent, you may be thinking about ways you want to support them. Hopefully this list provides some ideas for you to think about during this new life adventure.
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