Grandchildren are great. They give grandparents a chance to be parents again with the ability to hand them back at the end of the day. After years of helping to bring them up, it can leave some grandparents wanting to help them as their grandchildren fly the nest and head off to college. So just what can these willing grandparents do to contribute towards their education?
Uniform Gift to Minors Act
When setting up one of these generous accounts, grandparents will be able to help until their grandchild becomes an adult. Bear in mind, this does all depend on the state though as sometimes this can mean by the time they are 18 years old, or the time they are 21. It’s the grandparents’ job to put money into the account which will then be gifted to the person in question. A portion of this account will be straight up untaxed to the grandchild, while the other part will only be taxed at a child’s rate. It’s a win-win situation!
This is a different kind of savings account. It works by the grandparents adding in money where it will grow tax-free so long as the grandchild decides to spend the balance on their education, It also remains tax-free when the money is withdrawn, but all’s not lost if the grandchild chooses to take a different path in life. Perhaps they want to go traveling or they have been offered a once in a lifetime job opportunity? Well, in this case, the money can simply be transferred into another grandchild’s name, or even a nephew or niece.
Loans or tuition fees
One way that grandparents can help their grandchildren is by giving them money directly, without the need for any bank accounts. This could be by paying a portion (or even all) of their tuition fees by sending it to the college directly, or giving it their grandchildren so they can transfer it over. Another way is to contribute towards the college loans throughout the year. This means that you will indirectly be helping towards both their educational time at college, as well as the social side that comes with it all.
Educational Savings Account
This type of account gives grandparents the ability to save up to $2,000 a year where it will be kept safe and sound until the grandchildren need it. The account will then continue to grow over the years where grandchildren can then get access by the time they are fully accepted into college. The best bit? All the money is then available tax-free, but there is a catch: the money must be put towards educational purposes. As long as the grandchild is definitely going to be heading to college, then this is the perfect kind of savings account.
There we have it, some of the best ways that grandparents can help contribute towards their grandchild’s education. While it is an incredible gesture for any family member to put forward, it is important to get the advice of financial advisors before setting anything in stone. After that, you’ll both be all good to go!