The ever-rising costs of college have prompted wealthy, retired grandparents to kick in substantial sums of cash for their grandchildren's tuitions and related expenses will be covered, according to a new study.
More than 8 percent of ultra-high-net-worth retirees are helping a child with educational expenses and more than 20 percent are paying all of the college costs of a grandchild, according to an April survey by Chicago-based research firm Spectrem Group. The average age of respondents was 66, and their net worth was between $5 million to $25 million, not including their primary residence.
Respondents who help their own child are likely to be paying the bulk of the bill, while these retirees helping a grandchild are likely to be paying one-fourth or less of the costs, according to Spectrem's initial survey of more than 930 investors. The survey also found that 45 percent of those helping a grandchild are paying 10 percent or less of the bill, and another 20 percent are covering 11 percent to 25 percent of the costs.
The average in-state tuition and fees at four-year public colleges surged 8.3 percent this past fall, according to Princeton, N.J.-based The College Board. As a consequence, more grandparents are digging into their pockets to help pay them.
Sixty-six percent of retirees say they have long-term plans for the educational expenses of a grandchild.
"That group is now saying, 'I'm worrying about my grandchildren and their education expense and I feel like I now have to participate in paying more of it than perhaps I did," Spectrem Group President George A. Walper said.