College: The Ultimate Gift Idea This Holiday Season

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With the holiday season in full swing, we're on the hunt for the perfect gifts for the kids in our lives. Instead of waiting in long lines or paying rush shipping charges, there could be a gift that leaves a more lasting impact than the latest toy or game: money for a college education.

According to our annual college savings study, parents plan to cover 64 percent of their children's total college costs, but are on track to meet just 28 percent of their college savings goal. Given that savings gap, it seems likely that parents would look to their circle of friends and family for help, but that's not always the case. In fact, only 21 percent of parents report asking family and friends to direct gifts to a college fund. However, family members are likely willing to help, and perhaps relieved they won't need to fight the holiday crowds.

Grandparents Can Help Fill the College Savings Void

Fidelity's 2014 Grandparents and College Savings Study found that 72 percent of grandparents think it's important to help grandchildren pay for their college education, and an overwhelming 90 percent would be likely to make a gift to college savings in lieu of traditional gifts for birthdays, holidays or other special occasions if asked.

Why are so many grandparents so passionate about helping their grandchildren? In addition to wanting the best for their families, Fidelity's newest eBook, "Gifting Grandparents: A Holiday Tale," uncovers more about grandparents' motivations, such as wanting to preserve their family legacy. Not only do grandparents want to help financially, they're also getting involved in the planning process. Among those grandparents who speak with their adult children about a grandchild's college education, 59 percent give advice at least once a year about saving for college.

Beyond understanding the importance of saving for and receiving a college education, grandparents also know how to help save. Fifty-two percent of grandparents are familiar with 529 college savings plans. They like that earnings from a 529 college savings plan can be withdrawn federal income tax-free for qualified education expenses, and many also appreciate that funds can be held until they decide when to share them with their adult children, grandchildren or directly to the college of choice.

Contributing to College Made Easy

Parents who want to bolster their children's college savings this holiday season should consider having conversations with grandparents about contributing. Instead of gifting in the form of cash or a check, investing in a 529 college savings plan can help stretch monetary gifts as contributions can grow tax-deferred.

To make the contribution process easier, Fidelity offers a 529 Online Gifting Service, which lets owners of Fidelity's 529 college savings accounts use social media to encourage friends and family to help them save for college online. Grandparents can give the gift of college without leaving the comforts of their own home.

Why not discuss saving for college with grandparents and other family members this holiday season? It's likely that they'll want to help and contribute a meaningful gift that will make a difference for years to come.

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.

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¹Fidelity Investments,"8th Annual College Savings Indicator Study", August 2014