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.
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.
What if I don’t want to set up a 529 account?
Parents can use Ugift® to invite others to celebrate a child's milestones with the gift of education savings. The gifts are then deposited directly into the Vanguard 529 Plan account.
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.
Contributions you can subtract from your income on your tax return, resulting in a lower tax bill.
The yearly, monthly, or weekly amounts you save in your account.
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.
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.
Open a Vanguard 529 account
Open a Vanguard 529 account
Upromise is a registered service mark of Upromise, Inc. Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC. Please note that Upromise is an optional service offered by Upromise, Inc., and is separate from the Plan. Specific terms and conditions apply. Participating companies, contribution levels, and terms and conditions subject to change without notice.
Upromise is an optional service offered by Upromise, Inc.; is separate from The Vanguard 529 College Savings Plan; and is not affiliated with the state of Nevada. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. For more information about Upromise, go to upromise.com.
All investing is subject to risk, including the possible loss of the money you invest.