Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Grandma can you spare a dime…or $10,000?

with 2 comments

Looking for financial help? Need money to go to college? Talk to Grandma.


New research says that the 70 million grandparents in this country control the majority of financial assets and spend over $2 trillion on goods and services every year – about $52 billion on their grandchildren.


“When the economic history of this recession is written, it will likely show increased spending by grandparents on grandchildren to compensate for reduced incomes of their adult children.” predicts the survey by


So rather than hit the bank of Mom and Dad – try the bank of Grandma and Grandpa or Great Grandma and Great Grandpa. They have more assets and less debt and, according to the research, a desire to help.


This rings particularly true as high school seniors are getting their acceptance letters for college and their parents are wondering how to pay the tuition bills, meet their own bills and save for retirement.


Of course the ability of a member of the older generation to help out depends on their financial circumstances.  Many are getting hit with higher than expected health care cost, reductions in retiree benefits from former employers and lower than expected income from investments. They can’t put their future at jeopardy to help another family member.


But if financially able, there are a number of ways a grandparent can help with college funding:

·         For young children, regular contributions to a college savings plan can be a tremendous help to cash squeezed parents.

·         Gifting – up to $13,000 per person per year can be gifted without tax consequences.  That can help pay tuition or living expenses.

·         Loans – student loans are more difficult to get than in the past.  A loan from a grandparent, with a pay-back schedule that begins after graduation can provide the resources now and interest income for the grandparent when the time comes to pay back.  Make sure you write up a loan document (even if it might be forgiven later) to make sure that everyone has the same understanding of the deal.

·         Direct payment of tuition – if the grandparent makes the payment directly to the school (pays the tuition bill for example) it is not subject to the gifting rules.


(You should check with a tax advisor on these strategies to see what makes the most sense for you and your grandchild.)


The survey estimates that grandparents spend $32 billion on tuition and other expenses annually.  Beyond spending on education, grandparents are giving their grandchildren over $5.5 billion each year in gifts of stocks, bond and mutual funds, according to the report.


Another way to help is to help a recent graduate facing mountains of school debt to pay off student loans.  An anecdote in today’s Wall Street Journal about student loans quotes a 24-year old graduate who gets $200 per month to help pay off her student loan debt as she tries to make ends meet.  It’s a wonderful bond that can develop between the generations when small financial help can reap such big benefits for a tight budget.



Written by Laura Rossman

April 21, 2009 at 1:06 pm

2 Responses

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  1. for a full copy of our white paper write me at

    Jerry Shereshewsky

    April 21, 2009 at 2:25 pm

  2. Helping to pay loans after college is better for students who might be eligible for financial aid. A “gift” to the student or parents could lessen the amount of aid they qualify for.

    Another way grandparents can help is to give students the means for paying off student loans themselves.


    April 21, 2009 at 3:37 pm

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