Grandparents play a wonderful role in a family dynamic. When possible, they’re there to support their children and grandchildren and watch their family blossom in front of them. One way that many grandparents like to support their family is through contributing to their grandkid’s education.
Education is an incredible gift, one that stands the test of time and outlives a dollhouse, stuffed animal, or other toys. It shapes the course of our lives and provides us with so many opportunities both personally and professionally.
I hear many of my clients ask how they should contribute to their grandkid’s education which is what inspired this post today. I’d like to share with you the top three ways you can contribute to your grandkid’s education.
1. Start Small & Remember Your Needs
Grandparent’s desire to help supplement education costs is an act of altruism and care. But it is important to know that your contributions don’t have to cover the full cost of tuition or fund all four years of a traditional bachelor’s degree. It can come in the form of a surprise care package during finals week, a Valentine’s Day card, a phone call to check-in.
Seemingly small acts of kindness may not cover tuition, but they will keep you involved in your grandchild’s life and show them your support for them in this new phase of their lives.
You are also in a new phase of your life: retirement. And in retirement, your needs are just as important if not more important than others around you.
You have worked hard to save up the money so you can live your dream retirement lifestyle, therefore it is important that you don’t stretch yourself too thin. Your needs are important and your retirement comes first. Should you have any additional income, then you can see how to best allocate it to show your support for your grandchildren.
2. Use a 529 Plan
A 529 plan is one of the most popular ways for families to save money for education costs. Many parents open them when their kids are young to begin the long journey of saving for education. But just because the account is in the parent’s name, doesn’t mean other people can’t contribute money to it.
One of the best ways to add to your grandchild’s education fund is to contribute directly to their 529 plan. By contributing to education in this way, you will ensure that no issues arise with FAFSA and financial aid packages down the line.
For your grandchild’s birthday, holiday, or other celebration, consider contributing the amount you would have normally spent on a gift to their education fund. Or you can get them something smaller and contribute the rest to the education fund. After 18 years, you will be surprised how much it will all add up!
Some grandparents set up their own 529 plan to keep track of their education saving. This can be a wonderful idea, but can also present some other financial aid considerations once your grandchild begins taking the money out of the account.
Because of this, many people transfer the ownership of the 529 plan to the parents so that they can get the lower parent 5.64% for FAFSA purposes. There are a handful of plans that have restrictions on changing ownership, so be sure to check on your plan before settling on this course of action. Before setting up your own 529 plan, or trying to contribute to your grandkid’s college costs, make sure to reach out to your financial planner. They can help you to coordinate a strategy that’s best for you and your grandkids.
3. Get Creative!
Who says education funds only come in the form of tuition?
As you well know, the cost of education requires much more than tuition. From food to books to supplies to living expenses, college costs add up quick. If you feel like you can’t help as much on the tuition, consider helping in some of these areas.
Gift your grandchildren money for their books one semester, send them a gift card for their favorite take-out place near campus, or if you are close enough, pay them a visit and take them out to dinner. Treating them with these things is not only kind, but it is also practical. I encourage you to think outside the box and help your grandchildren in the ways you can to provide meaning and impact in their lives and yours.
Contributing money to education is an amazing way for grandparents to be involved. By taking care of yourself first, you will be in the best position to contribute your time, resources, and talents, gracefully and impactfully.
Are you struggling with how to contribute to your grandkid’s education? Schedule a call with us—we would love to help you.