With college tuition costs continuing to escalate, grandparents are taking a more active role in helping to fund a college education for their grandchildren via vehicles such as a tax-favored 529 savings plan. More than half — 53% — of grandparents are saving or plan to start saving to help pay for college costs, Fidelity reports in its recent 2014 Grandparents and College Savings Study. All told, those grandparents indicated they expect to contribute a median of $25,000 in college education funds for all their grandchildren, with 35% anticipating contributing $50,000 or more.
Given the financial ramifications of investing in a grandchild’s education, it’s important to accompany that from-the-heart generosity with careful planning, so grandparents and grandchild(ren) alike get the most from the investment. Here are a few suggestions to make the planning process go more smoothly: