Grandparents today are increasingly committed to pitching in to help pay their grandchildren’s college expenses, a study released Tuesday by Legg Mason found.
Two-thirds of those with college-bound grandchildren were saving or planning to save for their grandchildren’s future education, and 40% of this group was planning to use 529 college savngs plans, the survey found.
“When we asked whether grandparents used 529s to save for their own children’s needs, only 10% said yes,” John Kenney, head of Legg Mason’s Global Asset Allocation group, said in a statement. “But a generation later, as today’s grandparents become more investment savvy and 529s are more established, we are seeing an increased reliance on them.”
Respondents were age 50 to 80 with a household income of more than $50,000, and had grandchildren under age 1, were expecting a grandchild in the next nine months, or had grandchildren currently enrolled in a four-year college or university or in a postgraduate program. Forty-six percent of respondents reported household income greater than $100,000.
A Desire to Help
The study found that the most appealing 529 plan features included these:
- 54%: ability to contribute on a tax-deferred basis
- 48%: flexibility to use the funds for a variety of college expenses
- 45%: latitude to pay for tuition, fees, room, board, books and supplies
- 33%: discretion to make small contributions that fit within grandparents’ budgets
- 32%: freedom to use the funds at any college deemed an “eligible institution”
- 30%: ability to retain control of the assets
Grandparents were saving for their grandchildren’s college education largely out of deep commitment to family and — if they had the ability — in hopes of paving the way toward a better life, while instilling the value of hard work, the survey found.
The desire to help appeared here to stay. Of respondents with grandchildren already in college, 39% were helping financially — a figure that leapt to 66% for grandparents who had grandchildren planning to attend college in the future.