Author: elenloth

If you are the parent of a young child, and a family member offers to pay for their education, you thank them politely and then conduct your planning as though they are contributing $0.

Exception #1: if they show you the statements every year and have a coherent plan for how they will conduct themselves if the child does not conform to their expectations of behavior, how this savings account interacts with the Medicaid clawback period, etc. Then you can safely count on the dollar value you see.

Exception #2: they write you a check for you to deposit into the child’s 529 plan.

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Note that you can start saving for a future child’s education before that child exists, in most states. Create a 529 investment account with yourself as both Owner and Beneficiary; then, when the child is born, transfer Beneficiary to the child. You remain the Owner.

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If you are a grandparent who plans to contribute to a child’s education, you need to first research the cost of a college education in the state where your grandchild resides. I had a friend whose in-law did the thing in the first section here, and it turned out they had saved exactly $500. Her child (expected to graduate in 2031) will probably have college costs three orders of magnitude greater than that.

You do not have an obligation to cover the entirety of anyone’s education, of course. But we are grandparents of action; lies do not become us. A lot of people in my parents’ generation seemingly think that college still costs $250 a semester despite what they paid for OUR education.

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If you are the parent of a high-school aged child who is looking at colleges, you need to be explicitly clear with them about what you can and cannot afford to contribute to their education. Morally speaking, you also owe them help with filling out the FAFSA. I’ve heard enough horror stories of people whose parents refused to “give the government that information” (IRS notwithstanding) and denied their children any opportunity at grants or scholarships.

I still remember a high school friend whose parents just didn’t tell her how much they could afford, allowed her to get her heart set on a private college in the northeast, and then told her they could only afford in-state and she’d have to make up the rest in loans. She was extremely sad to have to give up her first choice school, even though she absolutely made the right decision in going to an in-state public school rather than taking out loans. Her parents should have been realistic from the start. If you are a parent in this situation: swallow your pride and be honest and clear with your child.