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This Holiday Season, Plan Beyond the Shopping and Festivities – Plan for the Future

collegesavingsThe holiday season is filled with joy, celebration and lots of planning—planning the perfect gifts, planning where to get the best shopping deals, or planning a delicious holiday menu.

Yet there is one plan that isn’t always top of mind come December: planning for college. With the cost of college doubling every nine years[i] and parents only on track to cover 28 percent of their college savings goals[ii], there is no better time to make saving a priority.

Giving: A Family Affair

Parents don’t want their children living with debt, as eight out of 10 are concerned that it will hinder their child’s ability to be financially independent post-graduation[iii]. Despite that fact, and that many parents are failing to meet their college savings goals, many are not asking for help from loved ones. Only 21 percent of parents report asking family and friends to consider gifting to a college fund in lieu of traditional presents for special occasions[iv].

The good news is that friends and family—particularly grandparents—want to help and are already having college savings conversations. Fidelity’s recent Grandparents and College Savings Study found that 69 percent of grandparents acknowledge talking to their children about college issues, including topics like the total cost of college and how the family will pay for it. But grandparents aren’t just stopping with conversations; they’re contributing too. According to the study, 90 percent of grandparents reported that they would be likely, if asked, to make a contribution to their grandchild’s college savings fund for special occasions in place of other gifts[v].

What’s driving grandparents’ willingness to help save? Fidelity’s newest eBook, “Gifting Grandparents: A Holiday Tale,” explores these motivations and many grandparents cite the importance of an education, skyrocketing tuitions and fees, and wanting their grandchild to be debt-free post graduation as reasons behind their generosity, among many more[vi].

Saving Made Easy

One way that grandparents are helping their grandkids plan for the future is by contributing to 529 plans. According to the same study, 52 percent of grandparents report already being familiar with 529 college savings plans, which are dedicated solely to college savings and allow savings to be used federal income tax-free for qualified higher education expenses such as tuition, books and other education-related supplies and fees.  In fact, there was a 12 percent increase in the number of new Fidelity retail 529 accounts opened by grandparents during the first four months of 2014 alone (January through April), compared to the same time period in 2013[vii].

Adding the gift of education to your holiday plans has never been easier. In fact, grandparents and other loved ones can gift from the comfort of their own home. Using Fidelity’s free 529 Online Gifting Service, owners of Fidelity’s retail 529 college savings accounts can use social media to encourage friends and family to help them save for college online. Giftors, like grandparents, can send their contributions electronically directly to the 529 college savings account – so no need to mail a check.

By: Keith Bernhardt, vice president of college planning at Fidelity Investments

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the designated beneficiary’s home state offers its residents a plan with alternate state tax advantages or other benefits.
Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.
Please carefully consider the Plan’s investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917
©2014 FMR LLC. All rights reserved.


[ii] Fidelity Investments, “8th Annual College Savings Indicator Study,” August 2014

[iii] Fidelity Investments, “8th Annual College Savings Indicator Study,” August 2014

[iv] Fidelity Investments, “2014 Grandparents and College Savings Study,” June 2014

[v] Fidelity Investments, “2014 Grandparents and College Savings Study,” June 2014

[vi] Fidelity Investments, “Gifting Grandparents: A Holiday Tale,” December 2014

[vii] Fidelity Investments business data through April 30, 2014

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