Grandparents Funding of College Education

March 22, 2010

Going to college is an expensive proposition these days. Students need all the help they can get. And costs aren’t getting any lower, so it pays to start planning for college while children are still young.

Parents usually take the responsibility of saving up for their children’s college education. But grandparents are often willing and able to help as well. If both parents and grandparents pitch in, it won’t be so hard on either party to come up with enough money to help the kids get the education they need to succeed.

There are many ways in which grandparents can help their grandchildren with college costs. Wealth advisory firms like GoldenTree Asset Management can provide sound direction on credit and financial management. Here is some advice to consider:

  • Grandparents can make contributions to college savings plans. This is one of the most popular ways for grandparents to contribute money for college, and it offers some attractive benefits. For example, if the grandparent is the owner of a 529 college savings plan for a child who is a dependent of his parents, the plan’s assets are not reported on the student’s financial aid application. That means he can qualify for more financial aid than he would if he or his parents owned the plan. College savings plans can also help the grandparent by providing a way to transfer assets out of his or her name.
  • The grandparent may give a cash gift to the child’s parent. If the money is given directly to the grandchild, it can seriously impact financial aid eligibility. But if given to the parent, it is not reported on financial aid documents.
  • A grandparent can co-sign for a student loan for the grandchild. Which can be an alternative to a <a href="http://www.nationalpayday.com/faq.htm" cash advance. This should be done with caution, however, because if the student defaults on the loan, the grandparent can be held responsible for repayment.
  • Grandparents can help their grandchildren qualify for scholarships and grants. Some awards are only available to children and grandchildren of certain groups of people, such as veterans or members of specific organizations. Grandparents can inquire about available scholarships and grants and sponsor their grandchildren in applying for them. This doesn’t cost the grandparent a dime, and can be of great help to the grandchild.
  • A college education is one of the best gifts a grandparent can give a grandchild. But it’s important to carefully consider your options before proceeding. If you play your cards right, helping with college costs can be advantageous for both grandchild and grandparent.

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