Grandparents can help their grandchildren succeed in their professional life by funding their educational life. They can send their grandchild to school by preparing for their future in advance or helping them with their college fees when they get older.
If you are a grandparent who wants to help their grandchild get a good education at a respectable university, here are a few ways you can help them pay for college:
1. Provide them with a Loan
If your grandchild is about to head off to university, you can provide your grandchild with a loan to help them pay their college institution fees. You can provide them with a loan worth up to $10,000 without interest. If you want to provide them with a loan more than $10,000, the Internal Revenue Service (IRS) will charge a low interest fee.
You can establish the terms and conditions of the loan as well. For instance, you can allow the interest accumulate until they graduate, request to receive only interest payments for a specific duration, or convert the loan into a graduation gift.
2. Repay Their Student Loans after They Graduate
Grandparents can repay their grandchild’s students loans after the graduate. By promising to pay off their debt, it will give your grandchild an incentive to stay in college and graduate. On their tax return, they will be able to subtract an interest up to $2,500.The downside of the loan is that the loan will be considered as a gift, which means that any amount more than $14,000 ($28,000 for married couples) will be taxed.
3. Invest in the United States Savings Bonds
The process of buying the U.S. Savings Bonds is easy and people can do it by going to their local bank. By investing a savings bond, people are making a safe and risk-free investment in their grandchild’s future. People who have newly become grandparents can invest in their grandchild’s future now. People who invested in bonds at the age of 24 and after 1989 can redeem them tax-free.
4. Establish a College Trust Fund
Another way grandparents can help secure their grandchild’s future is by setting up a college trust fund. When they become older, they can use the trust fund to pay for college. Grandparents can restrict their grandchild’s access to the trust fund. It does not matter what age the grandchild is for their grandparents to restrict their access.
If they opened a trust fund when the child was born, they can allow them access to it when time comes for them to go to college. Moreover, grandparents can indicate their wishes in the agreement and the trustee, the grandchild, will have to obey and fulfill them.
Grandparents can help start funding their education when they are young or start funding it when they get older. Grandparents do not have to help in entirety either, but as much as they can. With the rising cost of education, a little help goes a long way.