Planning on Helping Pay for Your Grandchild’s College Education?

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Doing so may not be the best way to help.

There are some things you should know…

First, are you financially able to help?

Parents and grandparents want the best for their children and grandchildren, yet find themselves facing a financial struggle. Even if not struggling now, if private student loans are part of the equation, might you be struggling later?

The number of older student loan borrowers has quadrupled since 2005, according to a 2017 report from the Consumer Financial Protection Bureau (CFPB). Most of the older borrowers aren’t taking on debt for themselves.

Second, how will helping impact available financial aid?

Cash can and usually does reduce the amount of aid offered.

While the gift (up to $15,000 in 2018) won’t be taxable to the grandchild, the school may count those funds as untaxed income and use it to reduce the aid offered.

Even a 529 has its drawbacks. Once the student withdraws funds from a grandparent-owned 529 to pay tuition, the money is treated as income on the FAFSA form for two years.

Frankly, there is a better way, though the way be unconventional.

Why not learn more about this unconventional method. After all, the conventional method no longer seems to work for most families.

We look forward to hearing from you!

 

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