Grandparents College Funds

MickeySP · Nov 24, 2015

just wondering how many like us are doing the college fund thing?

My DS makes a good living but has little for extras just now. We have all our debt/mortgage paid so we set up college funds for both DGD. However the parents don't know. Plus we bought life insurance investments for both girls.

How many of us are out there? Oh they have no idea, would you let them know or just make it a graduation present?

Info - 1 is 7yo the othe is 2yo.

Bec3b1g · Nov 24, 2015

I have very happy memories of my grandpa talking to me about college. He told me many times that if I did the hard work and got accepted that he would pay for it. As far as college went, he was my biggest encourager. Sadly, he died before I went to college.

My vote is to let them know. Be the person that cheers them on. It will make an impact

Patience · Nov 24, 2015

My daughter is a senior in college. My mother in law puts $100 every month in my daughter's checking account and has done so since she was a freshman. We are all very appreciative.

sonnyjane · Nov 24, 2015

MickeySP said:
just wondering how many like us are doing the college fund thing?

My DS makes a good living but has little for extras just now. We have all our debt/mortgage paid so we set up college funds for both DGD. However the parents don't know. Plus we bought life insurance investments for both girls.

How many of us are out there? Oh they have no idea, would you let them know or just make it a graduation present?

Info - 1 is 7yo the othe is 2yo.

I wouldn't wait until graduation since the decision of where to go to school happens long before graduation and they might choose a different school based on what they can afford. For example they might turn down a dream opportunity not knowing it was attainable or might not even apply thinking something was out of reach.

Gumbo4x4 · Nov 24, 2015

My parents have made very generous contributions to their grandchildren's college funds. I hope one day to be able to do the same

Sadie22 · Nov 24, 2015

It would be important for the parents to know about this as they might make other financial planning decisions or may have knowledge about college funding that you may not. Putting funds directly in the child's name can have unintended consequences. It's best for all to be on the same page.

sonnyjane · Nov 24, 2015

Yes, just as you are secretly stashing away money, the parents may (or may already have) open a 529 for them and that money HAS to be used for college/education or there are income taxes and fees to pay, therefore costing money. I don't know what kind of account you've started, but if there's not open communication here, some costly mistakes could be made.

gotomu212 · Nov 25, 2015

What an incredibly generous gesture. I'm sure you son and grandkids will be SO appreciative.

I would just echo others though that you should clue them into your plans (even though the thought of a big reveal is so much fun). Saving for college is very similar to saving for retirement now. There are so many different tax rules and funding streams that to get the most out of it everyone should know about the plan. I also think it's totally worth it to have a chat with a college financial planner. We learned SO much from them when we were setting up our accounts.

It honestly is never to early to start!

PollyannaMom · Nov 25, 2015

I think I would let them know. It will help with realistic planning, and if the accounts are actually in your grandchildren's names, they will need to claim them on financial aid forms.

shoney · Nov 25, 2015

I don't think I would let them know at this time. when the kids are older and college planning is taking place, I would let them know.
Not everyone is Dis financially responsible. I wouldn't want my contribution to have any influence on what the parents choose to save. I know lots of ppl who wouldn't put much in knowing grandma was doing it already.
I would go by the individual situation. If the parents were struggling and stressing about it, then I may tell them to ease their stress. If not, I would pleasantly surprise them when the time comes near.

MickeySP · Nov 25, 2015

Sadie22 said:
It would be important for the parents to know about this as they might make other financial planning decisions or may have knowledge about college funding that you may not. Putting funds directly in the child's name can have unintended consequences. It's best for all to be on the same page.

Just additional info, my XDH is in financial management(think VP of pension investments) so tax implications & trusts have been taken in to consideration.

Meriweather · Nov 25, 2015

Grand grandma started DGD's when she was born with a $5000 donation.
We add on her birthday......she is 2.
We put in $1000 when she turned 1 and $500 when she turned 2 and will continue to do so as long as we can (dropped it down in case more grandkids come along)
DS also adds to it regularly. She should have a hefty sum with college time rolls around

We had college funds started for our kids from the time they were born and put money in every month. To us it was a bill that had to be paid, so no skipping a month for something else. Grandparents put big sums in every once in awhile.
Both kids went to college with no debt.

mjkacmom · Nov 25, 2015

Patience said:
My daughter is a senior in college. My mother in law puts $100 every month in my daughter's checking account and has done so since she was a freshman. We are all very appreciative.

You would have made out much better if you opened a 529 for her (when she was younger). We have one for all of our kids, and definitely have a lot more for tuition than if we left it in a checking account (or under a mattress...). Even after the market issues 10 or so years ago, we were still thousands ahead for dd19.

Southernmiss · Nov 25, 2015

Patience said:
My daughter is a senior in college. My mother in law puts $100 every month in my daughter's checking account and has done so since she was a freshman. We are all very appreciative.

Dhs dad adds $300 to our 2 college boys account each semester. They are very grateful to have it to help with books or gas $$.

For someone who wasn't able to set up a college fund for grandkids, I think it's a very generous thing to do.

Sadie22 · Nov 25, 2015

MickeySP said:
Just additional info, my XDH is in financial management(think VP of pension investments) so tax implications & trusts have been taken in to consideration.

I was not referring to taxes and trusts. Really, the parents should know. It's nice that you are able to and want to give money, but doing it as a surprise may not work out as well as you would all like if it works against some other pot of money the parents are setting aside. Please have a family discussion about this.

MickeySP · Nov 25, 2015

Sadie22 said:
I was not referring to taxes and trusts. Really, the parents should know. It's nice that you are able to and want to give money, but doing it as a surprise may not work out as well as you would all like if it works against some other pot of money the parents are setting aside. Please have a family discussion about this.

Believe me between mortgage & my DGD's private school & skating, hockey & figure there is no "pot of money"

We talked and have decided when she hits HS we will let them know, since it may affect her college choices.

Allison · Nov 25, 2015

Do not make this a surprise at graduation. Make sure this is known to the family when colleges are being considered.

apirateslifeforme · Nov 25, 2015

Our son is only 3 months old and we started a 529 as soon as we got his SSN. My in-laws also opened an account, but we know about it. DH sort of has to be on it - his parents are a little older than average (as are we) and his parents may not be around when DS graduates from high school. DMIL will be past 90 and DFIL will be pushing 100. God willing, we'll still have them, but realistically, what are the odds?

Vernie822 · Nov 25, 2015

I think it is very generous of you and will be greatly appreciated. My grandmother on my dad's side died years before I was born but 2 older cousins were left with some $$ to help with college tuition and I know that helped them a lot.

I agree w/ others saying to let them know before graduation - although you have the best of intentions, being aware of the financial situation when applying for colleges would be really helpful. I was a freshman in college not too long ago (2009) and I remember applying for financial aid. My decision to attend where I did was made because the other school I was considering would've cost me a lot more - so it could definitely impact a college decision. I'd say freshman year, or maybe sweet 16 (which is usually sophomore year around here).

gwynne · Nov 25, 2015

MickeySP said:
Believe me between mortgage & my DGD's private school & skating, hockey & figure there is no "pot of money"

We talked and have decided when she hits HS we will let them know, since it may affect her college choices.

I realize this is a personal decision but...my two cents...

I would never keep something like this secret from the parents, especially since there are accounts and investments set up.
Personally, I would ask the parents what would be most helpful to them-making some contributions to the child's private school education now, or setting up a plan to assist with college costs later?

If you are firm on college only, that's fine. I still think the parents absolutely should be informed (and frankly, asked if it's ok) before grandparents set up actual accounts or formal investments involving grandchildren. It's just being respectful of boundaries.

Grandparents College Funds

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