Relatives step up to help pay for college
More grandmas are writing tuition checks.
Students are increasingly including gifts from relatives and friends in the complicated puzzle of how they pay for the rising costs of college, a new survey shows. While still a small piece of college financing, it's the fastest-growing.
Such gifts rose by 53 percent in just one year, according to the third annual Sallie Mae-Gallup "How America Pays for College" study released this month. Amounts increased along with family income. Relatives and friends of higher-income students contributed an average of $2,387 -- 87 percent more than last year.
Parents who might have lost a job or some income are dialing their own moms and dads, experts say. At one time, they might have taken out a second mortgage to pay for an expensive education. But now there are fewer options.
"Previously when parents faced this suddenly daunting bill, they had that long-time piggy bank of home equity to turn to," said James Boyle, president of College Parents of America, based in Arlington, Va. "That has just basically dried up."
Meanwhile, grandparents who began saving for just this purpose when 529 Plans became popular early this decade are now making tuition deposits.
They seem happy to help. Many got a good deal on their own education and don't want their grandchildren swallowed in debt.
Savings paying out
Sonia Pond's grandparents opened a savings account for her when she was 11. Go to college, they pledged, and it's all yours. Seven years and $7,000 later, that 529 Plan helped her pay for nursing classes at the University of Minnesota.
Pond's parents and her job as a research assistant have covered most of her tuition, but her grandparents' gift "was really helpful," she said.
Her situation could be becoming more common as savings plans started earlier this decade are positioned to begin paying out, said Brian Lindeman, director of financial aid at Macalester College in St. Paul.
