How Grandparents Can Help With College Costs
For many grandparents, few things are more meaningful than investing in a grandchild’s future. And with the cost of higher education continuing to climb, that investment can make an outsized difference.
Consider the numbers: according to the College Board’s Trends in College Pricing and Student Aid 2025 report, the average total cost of attendance for a four-year degree at a public university now exceeds $123,000 for in-state students and can surpass $260,000 at a private institution. These figures include tuition, fees, room, board, and other expenses. For families planning ahead, those numbers underscore a simple truth: the earlier you start, the more impact your contributions can have.
The good news? When it comes to helping with college costs, grandparents don’t have to commit to one big move to make a difference. There are more ways to get involved than most people realize.
Ways Grandparents Can Contribute
A Little at a Time
An annual gift is one of the simplest options. You can give up to $19,000 per year per grandchild without triggering a gift tax filing. Over time, consistent annual contributions to a 529 plan or other savings vehicle can add up substantially, especially when you factor in the power of compounding.
A Larger Contribution Upfront
A strategy called “superfunding” allows a lump-sum contribution of up to five years’ worth of the annual exclusion into a 529 plan at once. That’s up to $95,000 per grandparent. This approach can be particularly powerful for younger grandchildren, giving the funds more time to grow. The key word is “up to.” If you have a larger gift in mind, it’s worth having a strategy to go with it.
Paying Tuition Directly
Payments made directly to a qualifying educational institution are generally not subject to gift tax, regardless of amount. This can be a highly efficient way to help, particularly for grandparents who want to make a significant contribution without the complexity of trust or plan structures. Just keep in mind that kids change their minds. A lot. Flexibility in your planning can go a long way.
A Rule Change Worth Knowing About
For years, common wisdom told grandparents to avoid contributing to 529 college savings accounts because distributions could count as student income on the FAFSA and hurt financial aid eligibility. But that’s no longer the case.
Under the FAFSA Simplification Act, which took effect with the 2024-25 academic year, distributions from grandparent-owned 529 plans no longer count as student income on the FAFSA. That shift opens the door for grandparents who have wanted to contribute more but were not sure if it would do more harm than good.
For example, say a grandparent makes a $19,000 contribution today, the full annual gift tax exclusion for 2026. For a college-bound senior, that covers nearly a full semester at a public university. For a newborn, that money can be invested for years alongside any other contributions.
A 529 plan is just one tool for grandparents to consider if they want to provide education support to their family. If you want to explore in more detail, let’s start by looking at how this would fit into your overall financial strategy.
There’s No One Right Answer
None of these paths requires you to have everything figured out first. The right approach depends on your situation, your grandchildren’s ages, and how your contribution fits with what the parents have in mind. Some grandparents combine strategies, making annual gifts while also planning a direct tuition payment down the road.
What matters most is that you’re thinking about it. A conversation with a qualified financial advisor can help you understand which options align with your goals, your tax situation, and your broader estate plan.
Let’s Talk About Your Legacy
At Pereira Wealth Management, we help grandparents turn good intentions into smart strategies. Whether you’re just starting to explore your options or ready to put a plan in motion, we’re here to help you make the most of your generosity. Contact our office to start the conversation.
Sources:
College Board: Trends in College Pricing and Student Aid 2025
Saving for College: FAFSA Simplification Act Makes Grandparent-Owned 529 Plans More Attractive
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
Disclosures: All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. 2). 529 Disclosures: Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state's 529 Plan.
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