Help with College Costs

Cecily O’Connor
RedwoodAge.com

To beat high college costs, university-age kids and their parents are increasingly relying on a tried-and-true scholarship source: grandparents.

About 65 percent of grandparents plan to contribute financially to their grandchildrens’ college education, according to a survey from The Hartford Financial Services Group. Over half will dole out more than $10,000, while a quarter will contribute more than $30,000.

Some grandparents start planning to help with college very early, putting away money while their children struggle with other expenses.

That’s in addition to the clothes, toys, restaurant dinners and other perks that grandparents bestow upon grandkids. About 40 percent of grandparents spend more than $2,000 annually on such expenses.

Still, while grandparents are ready and willing to help, some parents have trouble asking. Although high tuition costs often leave them with few alternatives. Currently, annual tuition at a four-year private school is about $35,000 on average, according to the College Board. Costs at public schools are about half that.

Grandparents’ willingness to help and be involved speaks to the expanded role older adults are taking with their grandchildren. Many grandparents, which includes millions of boomers, often play with their grandchildren and do fun activities. Some adults are experiencing this deeper relationship with grandkids because they have chosen to live near their families, even as their work life winds down.

The survey included input from 607 grandparents who have at least one grandchild under the age of 15.

Helping Hand
Whether you’re a parent in need of financial aid, or a boomer grandparents ready to lend a hand, the Hartford offered several talking points to use in  conversation as parents mark National Grandparents Day, September 7.

• Coming up short. Parents and kids need to understand total costs, and how much financial aid and scholarships may not cover. Scholarships and grants cover only 15 percent of the higher education price tag, according to a 2008 Sallie Mae/Gallup poll.
• Fading Support. Meanwhile, between 1997 to 2007, total federal aid declined to 58 percent from 66 percent of the total funds used to help finance postsecondary education, according to the College Board.
• Financial advantages. 529 college-savings plan contributions have significant tax advantages. Among them: contributions may be deductible for state income tax purposes; investments grow tax-deferred; and distributions taken for qualified education expenses are federal income-tax free. Grandparents who open their own 529 Plan accounts with their grandchild as the beneficiary can determine how contributions are invested and when withdrawals are made. And if the grandchild decides not to attend college, the account beneficiary can be changed to another eligible family member.