Skip to main content

College saving for your grandchild (or niece or nephew or …)

The greatest gift you can give is a future full of possibilities. Give the child you love a head start on college!

Starting to save

Trust us: Mom and dad will be thrilled you plan to help send their little one to college. But before you send a check somewhere, talk with them about their ideas on the best way to save.

For example, if they already have a college savings account set up, you could simply give them money to put in it. Or you could open your own separate account if you want more of the benefits and control.

If you're thinking of celebrating a child's birthday with college savings rather than more toys and games, you're in good company. In fact, 17% of undergrads received gifts from family and friends to pay for college costs in 2014, with an average amount of $4,788.

At a four-year, in-state public school, that could pay for a lot:

  • Half the cost of the year's housing and meals,
  • A full semester's tuition and fees,
  • More than a year's worth of transportation and other expenses, or
  • 4 years' worth of books and supplies.

Average amount gifted compared with 1 year of average expenses

A series of bars showing the average amount gifted to students compared with overall college expenses.

This illustration shows the average amount family members and friends gifted to students in 2014, according to How America Pays for College 2014: A national study by Sallie Mae and Ipsos. It also shows the average amount undergrads paid for college expenses at an in-state, public college in 2014, according to The College Board, Annual Survey.

Here are some things to know:

  • Tax deductions for college contributions (offered by 529 plans) are generally only available to account owners.
  • Money that's in an account owned by the parents or child will be taken into consideration by financial aid formulas. But money you (as the grandparent, aunt, uncle, or friend) put away in your own account won't be counted as savings.
  • However, when you take the money out and use it to pay for college, it may be counted as income for the student and have a much larger impact on financial aid than if the student or parents owned the account. (College savings withdrawals from accounts owned by students or parents will never be counted as income—just as savings.)
  • Unless you open the account in your name (as the account owner), you won't be able to access information about it or make any account decisions without special permission.

Choosing an account

If you decide to open your own account, most of the same considerations apply to you as they would to parents. There are a few things you should keep in mind though:

  • If you choose an account type that requires you to name a beneficiary and, at some point, you need to transfer the money to a different beneficiary, you can only switch the account to someone in the original beneficiary's family.
  • If you choose an account type that doesn't require you to name a beneficiary, you'll need to make sure your wishes for the money are clear by establishing an estate planning document, in the event you're no longer able to distribute the money when it's time.
Open a college account

We're here to help

Talk with one of our education savings specialists.

Call 866-734-4533

Monday through Friday
8 a.m. to 8 p.m., Eastern time

Handy tools

You're planning to put money away for their future, but how do you know if you're saving enough?

Tips for grandparents

Learn some smart tips on giving the child you love a head start on college.

The Vanguard 529 Plan

Discover the many benefits of our premier college savings plan.


Layer opened.

Average amount gifted compared with 1 year of average expenses

This chart shows a breakdown of average college costs for an undergrad student at a public college. In 2013, the average amount a student paid for housing and meals at a public college was $9,450. The average amount for tuition and fees was $8,890. The average amount for transportation and other personal expenses was $3,230. The average amount for books and supplies was $1,210.

To help pay for college bills, friends and family gave an average of $4,788 in 2014.

Layer opened.


Contributions you can subtract from your income on your tax return, resulting in a lower tax bill.

Layer opened.


The yearly, monthly, or weekly amounts you save in your account.

Layer opened.


The person you're opening the account for, or the future student. This person doesn't have control of the money in the account, but can use the money from the plan for school costs. The account owner controls the money on behalf of the beneficiary.