Should Grandparents Help Pay For College? Maybe Not.
January 9, 2023
By Bridgelight Financial Advisors
It can bring great joy seeing your grandchildren get accepted into major institutions and pursue degrees in a field of their interest. Their drive and success can spark interest in wanting to help them financially so that they can achieve their goals.
A major financial contribution can however negatively impact their chance to qualify for institutional grants and scholarships used by private schools as well as some state universities through the CSS Profile.
What is the CSS Profile?
The CSS profile is a function used to qualify for need based aid that are private, institutional grants and scholarships. Over 300 distinguished institutions require the CSS profile for the 2023-2024 academic year.
The Good News
The federal government has removed the question about outside help with college costs as part of its move to simplify the federal financial aid application known as FASFA.
If your grandchild is applying to a university that does not require the CSS profile your financial contributions would help them. In addition, if your grandchild does not qualify for need-based aid the contribution will not penalize them from receiving anything additional from the school. Merit scholarships will not be affected either because they are based on academic performance.
If you do plan on assisting financially a 529 plan is ideal to help contribute to your grandchild’s college endeavors.
The 529 Plan
They are legally known as “qualified tuition plans” that are sponsored by states, state agencies or educational institutions. There are prepaid tuition plans that involve the purchase of credits toward future tuition at participating colleges or universities. The second type of plan is an education savings plan which can be used for tuition, fees and room and board.
The 529 plans that are owned by grandparents do not have to be reported on the CSS profile only parent investments. If your grandchild is reliant on the need-based aid it is better to contributes to their payment of college at a certain point in the academic career to avoid negative consequences.
Avoiding The Penalty
If your grandchild is going to a CSS Profile institution and is relying on receiving need-based aid it is recommended that you help with the college costs in your grandchild’s second semester sophomore year. Parents are required to submit two-year-old tax information. Therefore, if you wait until the parents submit this information for your grandchild’s upcoming junior year your contribution will be beneficial.
Other Ways To Help
College can be a time filled with excitement for your grandchild, but also one filled with stress depending on their situation. Going through the process of selecting a major can bring on anxiety, financial concerns can be worrisome, their degree program can require great attention causing it hard to find balance and the list can go on.
Your support overall in the form of encouraging messages and calls from time to time can make the difference providing the motivation your grandchild might need.
At Bridgelight Financial Advisors we make it one of our top priorities to ensure our clients are in love with every aspect of their retirement. If you are in need of a financial advisor that specializes in helping you make your retirement a successful one, our team at Bridgelight Financial Advisors would love to help you experience confidence in every aspect of your financial plan. Call (203) 795-7080, email Advice@BridgelightAdvisors.com, or schedule an appointment online to meet and get started.
Bill Leavitt is the president of Bridgelight Financial Advisors, an independent, privately owned fiduciary financial advisory and financial planning firm. He specializes in working with pre-retirees, retirees, professionals, and women investors, helping them navigate a complicated and ever-changing investment landscape. With over 25 years of experience, Bill serves his clients using his own unique financial planning model, The Wealth Focus™ Process, where he helps clients develop their customized long-term wealth strategy in four comprehensive steps. A Connecticut native, Bill resides in southern Connecticut with his wife, Laura, and their three daughters. To learn more about Bill, connect with him on LinkedIn.
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