Grandparents are stepping up in many cases to help their grandchildren with college education costs, according to Fidelity’s “Grandparents and College Savings Study,” released Thursday.
Grandparents who are saving or plan to save for their grandchildren’s education think they will contribute a median amount of $25,000, and 35 percent expect to contribute $50,000 or more, the survey says.
The survey included 1,001 people 45 years of age or older who have at least one grandchild under the age of 18.
Fifty-three percent of those surveyed are saving or plan to save for their grandchildren’s college costs, and 35 percent are contributing to a savings plan on a monthly basis.
In many families, grandparents are taking part in college planning discussions, the survey shows. Sixty-nine percent of grandparents acknowledge talking to their children about college issues, including the total cost of college and how the family will pay for it. Fifty-three percent talk directly with their grandchildren as well, Fidelity says.
Although some reports have shown a declining awareness of 529 college savings plans, Fidelity reports a 12 percent increase in the number of new retail 529 accounts opened by grandparents during the first four months of 2014 from the same period last year. Overall, approximately 15 percent of Fidelity-managed retail 529 accounts are owned by grandparents.
The majority of grandparents (72 percent) think it is important to help grandchildren pay for their college education. Among those who talk to their adult children about a grandchild’s college education, 59 percent give advice about saving for college at least once a year, the survey shows.
“The study indicates that many grandparents value a college education and consider it an important component to providing young people with the best opportunity to succeed,” the report says. “More than a third (37 percent) say they worry about their grandchild’s ability to attend college without incurring significant student loan debt.”
Fidelity urges financial advisors to take advantage of the college conversation to build a relationship with their clients’ children and grandchildren.