COLLEGE SAVINGS 101

Savingforcollege.com

For many college hopefuls, grandparents coming to the rescue
http://www.savingforcollege.com/articles/for-many-college-hopefuls-grandparents-coming-to-the-rescue-651

Posted: 2014-07-25

by Keith Bernhardt, vice president of college planning at Fidelity

Parents strategizing to cover the cost of college may not have to look very far for an additional helping hand. One group of advocates is stepping up to help save for college and providing significant support: grandparents.

According to Fidelity’s 2014 Grandparents and College Savings Study1, nearly three quarters (72 percent) of grandparents feel it is important to help pay for their grandchildren’s college education. While that doesn’t mean that all grandparents have the means to help financially, many are jumping in to help save, and others are offering advice or participating in planning discussions.

Why this feeling of responsibility and generosity?

Grandparents recognize the challenges parents and college hopefuls face when it comes to rising college costs, and many want to help their grandchildren avoid the significant financial burden of student debt after they graduate.

Today, more than half (53 percent) of grandparents are either currently saving or say they plan to start saving to help pay for their grandchildren’s future college costs. And many plan to make significant contributions. Asked how much they anticipate giving to the college education funds of all their grandchildren, the median answer was $25,000. More than a third (35 percent) of grandparents said they expect to contribute $50,000 or more.

The best ways for grandparents to help pay for tuition

How to Ask Grandparents for Help

Sharing college savings goals and involving grandparents in the planning discussion can be a great first step to getting grandparents involved. They may just be waiting for you to ask. An overwhelming 90 percent of grandparents report that they would be likely, if asked, to make a contribution to a college savings fund in lieu of other gifts for a birthday, holiday or other special occasion. So if parents prefer that grandparents contribute to a college savings fund instead of buying yet another toy, it may be a welcomed gift request.

Another way to break the ice: this generous generation is also increasingly active on social media, and perhaps primed to be asked for their support online. Industry reports show that Facebook participation of those age 55 and older has grown by 80 percent over the past three years. By leveraging tools like Fidelity’s online gifting service, parents can more easily ask grandparents, and other friends and family, to gift to a Fidelity-managed retail 529 college savings plan by sharing a link via email or through social media accounts like Facebook. The link goes to a customized online gifting profile for the child’s college savings – allowing grandparents to make convenient online contributions without the hassle of writing a check and sending via mail.

10 reasons to give the gift of college education

Options to Help Save

For grandparents who want to help fund future college costs, deciding where to save requires some thinking. A good first step is to determine the desired level of control over the contributed funds. This will help grandparents determine the type of college savings account that is best for them, either as an account owner, or simply as a contributor to an existing account. Grandparents report that they like 529 college savings plans because of their tax advantages, the ability to change beneficiaries, and the control account holders have in deciding when the funds are distributed to help pay costs. These savings plans can also be attractive to grandparents who want to lower the value of their taxable estate. There are other options as well, such as Coverdell or Custodial (UGMA/UTMA) account.

Compare your savings options.

Regardless of where a grandparent chooses to save, every contribution is an investment in the future of a college hopeful. So take the time to share college savings goals with grandparents in your family. Their gifts – whether large or small – can add up over time and have a big impact on a grandchild’s opportunities down the road.

Keith Bernhardt is vice president of college planning at Fidelity Investments.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the Plan's investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.



Fidelity Brokerage Services LLC, Member NYSE, SIPC,
900 Salem Street, Smithfield, RI 02917


1Fidelity Investments, 2014 Grandparents and College Savings Study, June 2014

Parents strategizing to cover the cost of college may not have to look very far for an additional helping hand. One group of advocates is stepping up to help save for college and providing significant support: grandparents.

According to Fidelity’s 2014 Grandparents and College Savings Study1, nearly three quarters (72 percent) of grandparents feel it is important to help pay for their grandchildren’s college education. While that doesn’t mean that all grandparents have the means to help financially, many are jumping in to help save, and others are offering advice or participating in planning discussions.

Why this feeling of responsibility and generosity?

Grandparents recognize the challenges parents and college hopefuls face when it comes to rising college costs, and many want to help their grandchildren avoid the significant financial burden of student debt after they graduate.

Today, more than half (53 percent) of grandparents are either currently saving or say they plan to start saving to help pay for their grandchildren’s future college costs. And many plan to make significant contributions. Asked how much they anticipate giving to the college education funds of all their grandchildren, the median answer was $25,000. More than a third (35 percent) of grandparents said they expect to contribute $50,000 or more.

The best ways for grandparents to help pay for tuition

How to Ask Grandparents for Help

Sharing college savings goals and involving grandparents in the planning discussion can be a great first step to getting grandparents involved. They may just be waiting for you to ask. An overwhelming 90 percent of grandparents report that they would be likely, if asked, to make a contribution to a college savings fund in lieu of other gifts for a birthday, holiday or other special occasion. So if parents prefer that grandparents contribute to a college savings fund instead of buying yet another toy, it may be a welcomed gift request.

Another way to break the ice: this generous generation is also increasingly active on social media, and perhaps primed to be asked for their support online. Industry reports show that Facebook participation of those age 55 and older has grown by 80 percent over the past three years. By leveraging tools like Fidelity’s online gifting service, parents can more easily ask grandparents, and other friends and family, to gift to a Fidelity-managed retail 529 college savings plan by sharing a link via email or through social media accounts like Facebook. The link goes to a customized online gifting profile for the child’s college savings – allowing grandparents to make convenient online contributions without the hassle of writing a check and sending via mail.

10 reasons to give the gift of college education

Options to Help Save

For grandparents who want to help fund future college costs, deciding where to save requires some thinking. A good first step is to determine the desired level of control over the contributed funds. This will help grandparents determine the type of college savings account that is best for them, either as an account owner, or simply as a contributor to an existing account. Grandparents report that they like 529 college savings plans because of their tax advantages, the ability to change beneficiaries, and the control account holders have in deciding when the funds are distributed to help pay costs. These savings plans can also be attractive to grandparents who want to lower the value of their taxable estate. There are other options as well, such as Coverdell or Custodial (UGMA/UTMA) account.

Compare your savings options.

Regardless of where a grandparent chooses to save, every contribution is an investment in the future of a college hopeful. So take the time to share college savings goals with grandparents in your family. Their gifts – whether large or small – can add up over time and have a big impact on a grandchild’s opportunities down the road.

Keith Bernhardt is vice president of college planning at Fidelity Investments.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the Plan's investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.



Fidelity Brokerage Services LLC, Member NYSE, SIPC,
900 Salem Street, Smithfield, RI 02917


1Fidelity Investments, 2014 Grandparents and College Savings Study, June 2014

 

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