College fund for someone else's child?

[shamrock30]

Has anyone set up a college fund for a relative who isn't their own child? I'd like to start one for my niece. The possibility of her parents saving anything towards college looks slim. She is in sixth grade.

It would be important that my husband and I keep control over the money until it was needed. We aren't looking to fund her whole education, but would like to give her something to supplement whatever other aid/loans she might qualify for if she chooses college. If you've helped a grandchild or niece/nephew, how have you gone about it?

 

[DVC Sadie]

Has anyone set up a college fund for a relative who isn't their own child? I'd like to start one for my niece. The possibility of her parents saving anything towards college looks slim. She is in sixth grade.

It would be important that my husband and I keep control over the money until it was needed. We aren't looking to fund her whole education, but would like to give her something to supplement whatever other aid/loans she might qualify for if she chooses college. If you've helped a grandchild or niece/nephew, how have you gone about it?

Yes, we have set up a college fund for our great neice. We opened up a brockerage account and make yearly deposits so she can get a good 4 year college education. Depending on her grades we will then decide whether or not to pay for continuing education. If you haven't spoken to a good Certified Financial Planner please seek one. They are invaluable in regards to helping you decide what the best way for you to go about setting up a college fund. We chose to keep her college account in our names so if she is able to get financial aid then we won't have messed up anything for her.

 

[SunshineOR]

Haven't done it, but I read an interesting article in Better Homes and Gardens last month for grandparents saving for grandkids and you might get some good information from there about how to go about it. I think the best way to go would be to open a 529 in your name. That way, your niece doesn't have to declare it on her Financial Aid Forms, so it won't count against her there. Plus, you'd be in control of the money and could "gift" it when you're ready. I'm no financial wizard and can't advise anything past that. What a lovely thing for you to do though--donations to our kids' college funds are our favorite holiday gifts!!!

 

[DVC Sadie]

Shamrock, By the way we have never told our any family members that we have set up a fund for our great neice because we don't want her to feel that she can just skate and not have to put forth any effort.

 

[EthansMom]

We have Education Savings Accounts for our kids.

You could open an Education Savings Account for your niece with yourself or your spouse as the custodian of the account. The catch is that a child can only have $2000 per year put into one of these accounts -- you might want to tell her parents so that they know you have already put this money in an account in her name. However, the investments would be directed by you, the statements would come to your home, and you can change the beneficiary of the account to the name of another relative if your niece should prove unworthy of your largess.

 

[DVC Sadie]

We have Education Savings Accounts for our kids.

You could open an Education Savings Account for your niece with yourself or your spouse as the custodian of the account. The catch is that a child can only have $2000 per year put into one of these accounts -- you might want to tell her parents so that they know you have already put this money in an account in her name. However, the investments would be directed by you, the statements would come to your home, and you can change the beneficiary of the account to the name of another relative if your niece should prove unworthy of your largess.

In my experience I have found it makes life a lot easier to remain anonymous as long as you can. I don't ever like to make anyone especially in my family feel that we had strings tied to her college fund.

 

[dcfromva]

shamrock30,
I did one for my niece because I wanted to make sure it would be there for her. It was a 529 plan.

I can't say enough good things about 529 plans used for this purpose. First of all, you as the owner retain control of the account. Secondly, if your niece elects not to go to school, the money can be transferred to another close order relative of the first beneficiary (the IRS has a list of examples as to who it can be transferred. )

You can time the contributions so you don't trigger gift tax limits. If you should pre-decease your beneficiary, the money in the 529 plan does not revert back to your estate. The contributions do not count against the beneficiary when it comes to financial aid.

There are tons of reasons why the 529 plan is a good thing.


-DC

 

[shamrock30]

Thanks, all of you, for the great advice! Due to a lot of complicated issues, I would probably prefer not to say anything to her parents about it at this point. I will definitely look into a 529 plan. I subscribe to BHG, so thanks for the heads up on the article in there!

 

[iggbees]

we got TONS of bonds for our college education from basically everyone in my family when i was little. it was seriously very helpful in paying off our education!

 

[RichNKatHolly]

We have a 529 for my sister (now 15). It's not much, but she doesn't know about it and it may help pay for a few books. There is no age at which she will automatically get the money. We have to apply for the withdrawal - or our designated beneficiary.

Good luck and how nice of you to be looking out for your niece.

 

[solgent]

we opened a 529 plan for my nephew, with his parents' knowledge and appreciation.

you do need the ss# of the beneficiary to do this.

 

[tlbwriter]

This is a wonderful thing for you to do. However you do it, please make sure it's not in her name so it doesn't count against her when she's trying to get financial aid.

 

[SandrA9810]

Don't forget to sign up with Upromise. They offer monthly "coupons", you select the ones you'll use. Then when you go to the store, and they scan your rewards card, and the "coupon" amount will be applied to your account. As well as percentages of other items can be applied to your account. It's pretty much all invisible, but you'll be putting a few bucks away.
They also partner with many stores online. So a percentage of your total online purchase will go in the account, and many restaurants participate as well.

You can tie the Upromise account to a 529, but you don't have to. And you can withdraw the money from the account if you need the cash, for things like books. Or it can be tied to a sallie mae loan, and the balance can be transfered to pay that down.

Even stores like Publix that do not use "reward" cards for shopping, they still have a Upromise card that you can get for scanning at the register.