There is nothing a grandparent loves more than to support their grandchildren’s future. While summer is a good time to kick back and relax, college is right around the corner. Florida universities plan to open back up in the fall and students are eager to get back into the classroom. Unfortunately, the unknown for many college students is whether or not they can afford their tuition, let alone a dorm room. There are many financial plans available for grandparents interested in putting their grandkids through college. The 529 college plan is one way you can help get your grandkids through college. Education trust funds and student loans are also available for grandparents who are interested in lending a helping hand.
Patricia Windham, a financial advisor at Wells Fargo Clearing Services, LLC, explained how anyone interested can sign up for the 529 college plan. “An adult custodian opens the plan with a minimum dollar amount and adds funds as he or she can. Most 529 plans will accept an initial deposit of $250 to open the account and then the custodian can add periodically a minimum amount of $50.00,” Windham said.
“529 plans were made possible by federal legislation but are implemented at the state or institution level. Nearly all states have approved and adopted these qualified tuition programs (QTPs). Most states let nonresidents participate in their plans; although, the state tax benefits may be greater for residents than for non-residents.”
There are many benefits to the 529 college plan including planning out account balances with no income limitations as well as substantial contribution amounts. “The Tax Cut and Jobs Act expanded the federal definition of qualified expenses to also include up to $10,000 per year per beneficiary for tuition at an elementary or secondary public, private or religious school,” Windham said. Keep in mind, this not true for all states.
With the help of financial advisors, college savings plans are available to use and they are more than happy to help your grandchildren dive into their future endeavors.
The job market is competitive these days, which is why having a college degree is so important to the younger generation. According to Jobvite, a financial blog, 74 percent of employers believe hiring will become more competitive in the next 12 months and 31 percent of employers are concerned with the quality of the individual.
Educational trust funds are another form of savings your grandchildren could use. Your grandchild may not know it, but this is one of the most amazing gifts to receive during a birthday or special occasion.
Education trust funds are perfect if you plan on financing the education of multiple grandchildren or future generations that have not been born yet. To set up this trust fund, you will need to decide when it will take effect. Furthermore, you will need to identify a trustee and a beneficiary. The trustee controls the trust fund and the beneficiary receives the loans. Contact your financial advisor for more information.
Florida pre-paid plans are also available to use and have options that can cater to your needs. Prepaid plans allow you to purchase a plan with a fixed payment selection to secure future college expenses for less. This is guaranteed by the state of Florida and the age requirements are newborn to 11th grade. A prepaid plan covers a full ten years after your child’s high school graduation or college enrollment year.
Plan pricing for a prepaid plan is lower than what college is predicted to cost in the future. These plan payments are invested to cover the difference. Florida prepaid actuaries will even estimate future funds based on in-state tuition and fees, inflation, and historical usage patterns. If you have any questions about this plan, contact Florida Prepaid customer service at 1-800-552-4723 or by email at customerservice@florida529plans.com.
Malcolm Ballinger, owner of Ballinger Publishing in Pensacola, FL, explained ways the education trust fund has helped get his grandchildren through college. “When my oldest grandson was born, my son started an educational fund, and over the years, for birthdays or Christmas, we have put money in it. My three direct grandchildren all share this fund and when they go to college they can start withdrawing from it,” Ballinger said.
“It’s a way you can give to your grandkids tax free. When they go to college, the money is there. My philosophy always was that parents give their kids so many toys and stuff throughout the years, so they really don’t need another toy that they may not play with. That is why we’ve always given them money, so now it’s baring fruit,” Ballinger said.
If you are a military veteran, you are also eligible to receive a college savings plan. The Post 9/11 Veterans Educational Assistance Act of 2008 is available for veterans to use towards college. Although this is aimed toward immediate family members, grandparents who have legal custody of their grandchildren are eligible to receive this grant. It includes a monthly housing and book stipend as well as payments of tuition and other fees.
Student loans are also a great way to receive money for college. The Federal Parent PLUS program is a federal direct student loan offered to parents of dependent students. However, grandparents are not eligible to receive money from this program unless they have adopted their grandchild. There is the option to cosign private student loans on behalf of your grandchild.
Although student loans are useful in many ways, it is important to know the disadvantages. Specific student loans come with the responsibility of paying for it over time. Financially, student loan debt will make it difficult to support other lifestyle goals. Penalties for student loan debt include added fees and wage garnishment.
The Edward M. Kennedy Serve America Act, signed in 2009, is used for the low income, veterans, and education purposes. The act gives up to $1,000 towards educational stipends for older volunteers. Fortunately, this act represents a shift in the younger generation towards volunteerism. According to the National and Community Service, this act was put in place “to create new knowledge about how to solve social challenges in the areas of economic opportunity and provide problem-solving infrastructure in low-income communities.” The benefits may be used for the volunteer's own education or transferred to a child, foster child or grandchild.
Grandparents take pride and joy in providing any help they can. The 529 college plan, educational trust fund, and student loans are just some of the ways you can financially support your grandchildren through college. Overall, the goal of each of these plans is to reduce the stress of getting through college. Therefore, students have more time to focus on their studies and are able to receive the degree they always dreamed of. If you are interested in any of these college saving plans, set up an appointment with your financial advisor. Your grandchildren will be eternally grateful.
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