Grandparents looking to contribute funds to cover their grandchild's college costs often turn to a 529 plan, a type of account that provides tax benefits for education savings. But grandparents must take steps to get the best value from these plans and avoid hurting a student's financial aid options.
Typically, grandparents help pay for only a small portion of a student's college expenses. According to the 2021 How America Pays for College survey of college students and their parents, 11% of respondents reported using money provided by relatives to pay for college, contributing an average of $5,060.
Though the contribution may be small, families aiming to afford rising college tuition costs know that every dollar counts. Before opening a 529 plan for a grandchild, review these tips.