Generation Generosity: 60% of MA Grandparents Plan to Help Grandchildren Pay for College
BOSTON [March 17, 2015] - According to new research from the Massachusetts Educational Financing Authority (MEFA) and Fidelity Investments®, 60 percent of Massachusetts grandparents are saving or plan to start saving to help pay for college costs. A full 88 percent report they would be likely, if asked, to make a contribution to their grandchild's college savings fund for special occasions in place of other gifts.
Of grandparents already saving or planning to save, many expect to make significant contributions. When asked how much they anticipate contributing to the college education funds of all of their grandchildren, they report a median of $50,000, with more than half (51 percent) expecting to contribute even more.
The 2014 Grandparents and College Savings Study finds that a majority of grandparents in the Commonwealth are taking part in planning for their grandchildren's college career. In fact, more than 77 percent of grandparents think it's important to help grandchildren pay for their college education. Among those who talk to their adult children about a grandchild's college education, 62 percent give advice about saving for college at least once a year.
Why this feeling of responsibility? The study indicates grandparents:
- Value a college education and believe it is an important component to providing young people with the best opportunity to succeed.
- Recognize that as the cost of college continues to rise, parents and grandchildren face a big challenge in saving enough to cover costs.
- Worry that without help, their grandchildren could face a significant financial burden after they graduate.
"Grandparents have a strong desire to help with the cost of college because they know the significant benefits for both their children and their grandchildren," said Thomas Graf, executive director of MEFA. "Instead of giving toys for birthdays and holidays – gifts that will be broken and long forgotten – many grandparents see the wisdom of putting money aside for a gift that will last a lifetime – a college education."
According to the study, 56 percent of Massachusetts grandparents are familiar with 529 college savings plans, such as the U.Fund College Investing Plan offered by MEFA and managed by Fidelity Investments. Features of the U.Fund popular with grandparents include:
- Savings are dedicated solely for college.
- Earnings are withdrawn federal income tax free for qualified education expenses.
- Funds are controlled until the time comes to share them with children and grandchildren.
Additional findings from the survey:
- 74 percent of grandparents say they talk to their children about college issues, including the total cost of college and how the family will pay for it, and 48 percent talk directly with their grandchildren as well.
- For some, financial commitment will continue even once their grandchild is enrolled in college, with 62 percent of grandparents planning to help pay expenses by providing funds to the grandchild, the grandchild's parents, or directly to the college institution of choice.
- 48 percent of grandparents are including or thinking about including college savings for their grandchildren in their long-term financial or estate plans.
The Massachusetts Educational Financing Authority (MEFA) is a not-for-profit self-financing state authority dedicated to making higher education more accessible and affordable for students and families across the Commonwealth of Massachusetts. MEFA was created by the state legislature, at the request of Massachusetts colleges and universities, and provides community education programs, college savings plans, and low-cost financing options. In its over 30-year history, MEFA has assisted hundreds of thousands of families in financing a college education. For more information, visit mefa.org to learn more or follow MEFA on Twitter @mefatweets and on Facebook at mefaMA.
Public Relations Manager