Wouldn’t it be great if, just like a fat-cat banker on Wall Street, you and I could call up the Secretary of the Treasury and say “Well Mr. Secretary, it seems like the risk analysis I ran for the cost of my child’s college education was WAY off, and gosh, thanks to that forecasting error, the amounts I reserved to cover tuition and other costs just aren’t going to be anywhere near enough. So… how about one of those bailout thingies you guys are so good at?”
Yeah, sure would. Unfortunately for us little people, bailouts are likely to forever remain something we read about (and pay for), but do not get to experience, especially when it comes to college savings.
However, despite the cold shoulder from Uncle Sam, there are options for maximizing your college fund and turning what might seem like an overwhelming individual burden into a shared responsibility. One of the best ways to receive help is to let close friends and family know that you are saving for your child’s college education. If you’re starting early, the savings have years to grow and can make a meaningful difference in the cost of college for your child. And among your friends and family, the contributions of grandparents can be especially important.
A recent study from The Hartford found that 65 percent of all grandparents plan to make a financial contribution towards their grandchildren’s college education. However, a recent study from the College Savings Foundation shows that only 22 percent of parents expect their grandparents are going to help with their children’s education.
What does this say to me? A bunch of parents need to get on the phone and give Grandma and Grandpa a call!
With college costs almost certain to continue rising about 6% a year, the safest bet is to start saving early and let those years work for you. Discuss your college plans with your children’s grandparents and explain the value of setting money aside now so that it has time to grow before the tuition bills start to arrive can pay big dividends down the road.
A tax-free 529 college savings account is another great way to maximize the gains over time in your college fund. And last but not least, my company Freshman Fund lets you register your college fund online, so that friends and family can make college savings gifts directly to your child.
So until my “college tuition bailout” proposal starts to get some attention in Washington (hint: don’t hold your breath), the savvy college saver should take advantage of the time on their side until freshman year, save what they can, and discuss their plans with the grandparents, chances are good there’s undiscovered “college gold” at the other end of that phone call.
