How to Help Grandchildren Pay for College
Kids have to pay so much more for college now than they did years ago. Some students are graduating from college with a debt the size of a mortgage. As a grandparent, you have probably thought about this fact and wondered how to help grandchildren pay for college. Well, there are a lot of different ways for you to help them out. From providing financial advice to contributing to their savings, there is a lot you can do as their grandparent.
A study performed by LendingTree found that the average total cost of a public American college in-state is over $20,000 and out-of-state it is over $40,000. If your grandkids want to go to a private college like Harvard or Princeton, the cost will be at least $50,000. That is an astronomical amount of money for someone who is 17 to be paying.
Setting Up a Savings Account
One of the first and best steps you can take to help your grandchildren out with saving up for college is getting them to open a savings account. The savings account can be set up so that they can only put money into the account until it is needed for school. There are also savings accounts that have what are known as high yield interest rates on them. The interest rates of these accounts usually sit anywhere from 1.2% up to 1.75%. While not that high of an interest rate, it still means that the money sitting in the account can make money.
According to Sabrina Karl at Investopedia, you have a few options for setting up a high yield savings account. Karl’s top five recommendations for high yield interest savings accounts are as follows:
- Fitness bank savings account
- Neighbors bank savings account
- CFG bank’s high yield money market account
- UFB direct high yield savings account
- First foundation bank online savings account
Investing in Long-Term Bonds
Another option for you to help your grandchildren save money for college would be to invest in bonds. A bond is technically you loaning government or a corporation money. Purchase the bond providing the government or corporation with a loan and then on a specific date, they pay you back the cost of that bond plus interest on it.
They are a great long-term investment for your grandchildren to have access to once they attend college. Since it usually takes 10 years for the bonds to mature, they are best to invest in while your grandkids are young. They make a great gift for when they are older and may need some help financially for school.
Tuition Assistance and Scholarships
Did you know that there are dozens of scholarships that go unfilled every year merely because no one applied for them? That is unused money for education that just sits there. This is money that could be used by your grandchildren’s college tuition. Even if the scholarship is a small amount of money, each dollar counts when you are a university student. Although it can take some time to complete, scholarship applications can be well worth the time spent.
It is also possible that you may have knowledge about your family's history that can help your grandkids get a scholarship. There are scholarships for being the first person in the family to attend college. There are ones for kids who have a grandparent or great grandparent who fought in WWII or performed military service. There are even scholarships for people who have the same last name as the person who set up the scholarship fund. Your knowledge on all of this can be helpful to your grandkids.
Another interesting way to help your grandchildren to pay for college is tuition assistance. Tuition assistance is when a company reimburses an employee for money spent on college. If your grandkids have a part time job while in their last years of high school or while in college, it is possible they could apply for tuition assistance if their workplace has a program.
Some companies have great programs where they pay for up to 50% of tuition costs, but there are strings attached to this agreement. Usually the recipient of the assistance has to remain with the company for a certain period of time or else they will have to pay back the money.
Finally, student loans will help pay for college until your grandkids can pay the money back. The best student loans are generally the ones offered through the government because they have extremely low interest rates.
Student loans taken out through a bank tend to have a higher interest rate and will always require a cosigner. No bank will let a 17 or 18-year-old take out a loan when they have no credit rating. This means that you can help your grandkids out by being a cosigner on the student loan.
Being a cosigner on a student loan means that you agree to take over payments of the loan should your grandchild be unable to pay the bank back. However, when entering into a cosigner agreement, you should make it clear that you expect your grandchild to pay the money back, no ifs ands or buts.