Investing in the Future: Helping Fund Your Grandchildren’s Education

By Jennifer Osgood, President, Wagner Wealth Management

For many families, legacy isn’t just about leaving behind wealth. It’s about creating opportunity. Among the many ways you might use your wealth to provide opportunities for future generations, helping fund your grandchildren's education is surely one of the most rewarding.

If you’re considering helping a grandchild pay for college, the good news is that there are several smart, tax-advantaged ways to do so. With thoughtful planning, your financial support can complement your broader estate strategy and help shape your grandchild’s future.

Here are a few options to help strategically fund your grandchildren's education.

1. Open or Contribute to a 529 College Savings Plan

One of the most popular and powerful tools available to grandparents is the 529 college savings plan. These accounts offer tax-free growth and tax-free withdrawals when used for qualified education expenses.

There are two main strategies here. You can open a 529 in your own name, with your grandchild as the beneficiary. This allows you to maintain control of the funds, which can be helpful if you have multiple grandchildren or want to reassign the account later. Or you can contribute to a parent-owned 529, which avoids impacting financial aid eligibility under the FAFSA in most cases.

High-net-worth individuals should also consider the superfunding option. You can front-load five years’ worth of annual exclusion gifts into a 529 -- up to $90,000 per grandchild (or $180,000 per couple) in 2025, without triggering the gift tax, provided no other gifts are made to that beneficiary during the five-year period. This not only jumpstarts the account’s growth but also allows you to reduce your taxable estate efficiently. 

Be aware that contributions to 529s are not deductible on your federal income tax, but a portion may be deductible at the state level.

2. Make Direct Tuition Payments

Another powerful and often overlooked strategy is to pay tuition directly to your grandchild’s educational institution. Under current tax law, tuition payments made directly to an educational institution are not subject to the gift tax or the generation-skipping transfer (GST) tax. This means you can pay $60,000 or $70,000 per year in tuition for each grandchild without eating into your lifetime gift tax exemption or annual exclusion.

However, take note that this strategy only applies to tuition, not related expenses like books, housing, or meals. To cover those, you'd need to use an alternative method, such as a 529 plan or an annual gift.

3. Establish a Family Education Trust

For families looking to structure their legacy more formally, an education trust can be a sophisticated and customized solution. These irrevocable trusts can be drafted with specific terms—such as supporting only accredited programs or disbursing funds based on academic performance.

Trusts offer several advantages:

• Control over how and when funds are used

• Protection from creditors or divorce settlements

• Coordination with broader estate plans

Trusts do come with administrative responsibilities and legal costs, but for families with significant wealth and a desire to preserve educational support across generations, they are a valuable option.

Final Thoughts: Giving With Intention

Helping your grandchild achieve their educational goals is one of the most gratifying uses of your wealth. It’s not just an investment in their future; it’s an investment in your family’s values and legacy. 

As with any complex financial situation, it is essential to consult a trusted wealth advisor to determine the strategy that best aligns with your overall goals. When done thoughtfully, helping pay for higher education becomes more than a generous gesture—it becomes a powerful part of your legacy.

Jennifer Osgood is the President of Wagner Wealth Management, which has offices in Greenville, Anderson, and Oconee counties. Call us at 864-236-4706 or visit www.wagnerwealthmanagement.com to learn more about our firm.

Securities offered through Arkadios Capital. Member FINRA/SIPC. Advisory services through Wealth Management Advisors, LLC. Arkadios Capital and Wealth Management Advisors, LLC are not affiliated through any ownership.