Should You Pay Your Grandchildren's College Education?

By
Services for Real Estate Pros with Think Glink Media

should you pay your grandchildren's college tuition

 

 

 

 

When thinking of a great graduation gift for your grandchildren vacations, appliances, or dorm essentials may come to mind, but what about tuition. If you have determined that you can afford to pay for a portion of your grandchild's college, what other considerations should you keep in mind?

 

Assuming you have the financial means and the desire to do this, paying your grandchildren's college tuition (and other related costs) is a great way to transfer wealth to subsequent generations of your family. If you're thinking about paying your grandchild's tution, here are some things to consider:

Pay the tuition directly. Currently, the gift tax exclusion is $13,000 per person per year. This means you can give $13,000 to whomever you want each year without having to pay gift taxes or having this amount deducted from your unified gift and estate tax credit. If you are married, you can double this annual gift tax amount. However, if you pay the tuition directly to the educational institution, this amount is exempt from gift taxes and doesn’t count against the unified credit. This only applies to the cost of tuition, but you could also combine the direct payment with a regular gift if you want to cover additional costs such as room and board, books, etc.

Contribute to a 529 college savings plan. These plans are offered on the state level. They generally come in two flavors: accounts that allow for the use of various investment options (individually or in age-based funds) or prepaid tuition plans that allow you to buy “units” of future tuition at institutions in your state.If the child beneficiary doesn’t attend a school in the program, there are allowances for the benefit to be used elsewhere. A grandparent (or anyone else) can make contributions annually up to the gifting limits described above. Alternatively, you can make a lump-sum contribution of five years’ worth of gifts ($65,000, or $130,000 for a married couple) to each grandchild’s account.

For more information on how to best invest in your grnadchild, check out Roger Wohlner's blog on the Equifax Personal Finance blog: http://retirement.equifax.com/2011/02/should-you-pay-your-grandchildrens.html

 

 

 

 

 

Ilyce Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com, The Equifax Personal Finance Blogand CBS Moneywatch She is Chief Content Strategist at RealtyJoin.com, a community for real estate investor

 

 

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Rainmaker
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Tim Riddle
SFR,TAHS, Azle ,Fort Worth Real Estate
Tim Riddle Broker Associate,Marsha Hardin Real Estate

As a parent of a son in college, Any help would been great., its so expensive and really doesnt need to be that costly. Its sad so many deserving kids cant go to school. One book costing over $200 !! Yes that absurd and greedy as hell.   But what are you going to do? They have you tied to a fence post if you want your kids to further thier education.  If the grandparents can help with college it would be nothing but a huge plus for thier grandkids.

February 22, 2011 12:19 PM
Rainer
143,700
Victor Zuniga
Berkshire Hathaway Home Services California Properties

Being able to get a higher education is so much more important than material things because it will pay off in preparing you for a career in the future which will lead to a prosperous life.

February 22, 2011 12:38 PM
Anonymous #3
Anonymous
BO BO BOLINSKI

A college education is great IF IT CAN BE TURNED INTO A WORTHWHILE AND REWARDING CAREER. mY DAUGHTER GRADUATED FROM UT TEXAS IN RTF (RADIO TELE AND FILM) AND 2 YEARS LATER HAS YET TO FIND ANY JOB OPPORTUNITIES IN THIS HIGHLY COMPETETIVE FIELD. LOOKS GOOD ON PAPER AND I PAID A PREMIUM FOR THE OUT OF STATE TUITION. ONLY BONUS IS ITS A PARENT LOAN FROM DEPT OF EDU AND I HAVE BEEN DIAGNOSEED WITH TERMINAL CANCER AND WIIL BE FORGIVEN THE ENTIRE LOAN AMOUT. WHAT A PRICE TO PAY!

July 29, 2011 12:46 AM
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Ilyce Glink

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