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.”
What Your Peers Are Reading
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.