By Devon Copeland, Virginia529
September 12, 2019
As you might imagine, September is a great month to consider your child’s future—and your finances. Besides being “back-to-school” season, it’s also National College Savings Month.
Most parents believe their children will go on to receive higher education after high school, but according to student loan lender Sallie Mae, only 4 in 10 parents have started saving for their children’s future.
On the bright side, parents are increasingly saving in 529 plans, where their money is tax-free when used for qualified educational expenses. In the face of soaring college costs, grandparents are also joining on the mission to get children through college with less debt.
Did you know that grandparents can choose to open a 529 plan to put money aside for a grandchild’s future college expenses? Or that they can contribute to an account a parent has opened?
529 plan contributions are not deductible at the federal level, but more than 30 states offer a tax deduction or credit for contributions. However, some states only allow the 529 plan account owner to claim the deduction. Grandparents can check with their state’s rules and decide whether it makes sense to open their own account, or contribute to a parent’s account.
Almost all 529 plans accept gift contributions by check, and some programs offer gifting platforms that allow friends and family to make secure electronic deposits. Some 529 plans, like Virginia529, also offer co-branded Gift of College gift cards for purchase online or at retailers nationwide.
It’s easy to open an account or to contribute to an existing account in a few minutes. Instead of buying clothes and toys children will outgrow, remind the grandparents in your life that making contributions on birthdays, holidays, graduations, and any other important moments in their grandchild’s life is a great way to help put away money for college.
About the Author
Devon Copeland is the senior communications associate at Virginia529. Virginia529 makes education more accessible and affordable for families and individuals. With more than $74 billion in assets under management and 2.7 million accounts as of July 31, 2019, Virginia529 is the largest 529 plan in the nation. For more information on Virginia529’s college savings options, visit Virginia529.com or call 1-888-567-0540 to obtain program materials.