Call 909-348-2556 to speak with a licensed insurance agent.

Call 909-348-2556 to speak with a licensed insurance agent.

How to Help Your Grandchild Pay for College

Posted by Mansat Insurance Services, July 22, 2016

The costs of college are rising each year, which is why so many grandparents are looking for ways to support their grandchildren in getting an education. If your grandchild is young, then he/she may have some time to save.  If they are in college now or soon, however, you might be considering one of the following options.  Make sure you take care to stay within the IRS rules and consult a tax professional.  Here are a few of the more common options…

Paying for Tuition

Did you know that if you directly pay for your grandchild’s tuition, the money is not subject to gift tax?  If you go this route to assist a grandchild, you’ll definitely want to consult with a tax professional but it is a simple way for you to provide tuition assistance of any amount.

You’ll need to pay the school directly rather than writing out a check to your grandchild.

Be aware that this may affect his/her financial aid status and the tax-exempt status includes tuition only.  It does not apply if you are paying for room, board, or books.

Loan Your Grandchild Money for Tuition

You are allowed to give your grandchild an interest free loan of up to $10,000.  If you loan him/her more than that, there are some IRS rules regarding minimum interest you must charge, but that amount is low.

You can even set your own terms.  For instance, not requiring them to pay the money back until after they graduate.  Keep in mind, however, that if you end up forgiving the loan, your grandchild could end up having to claim the forgiven amount on their income taxes.

Again, this is an instance where you should consult with a tax professional to make sure everything is carried out properly.

Pay Off Their Student Loans

Has your grandchild already accrued loan debt from school?  Whether they are still in school or have graduated, you can pay some or all of their student loan debt.  Doing this does not affect their financial aid status, should they still be in school.

One factor to be aware of, however, is that the IRS would consider the money to be a gift so if you give over $14,000 in one calendar year ($28,000 for married couples filing jointly), then the money may be subject to gift tax.

The “theme” here is that if you want to help a grandchild pay for college, there are ways for you to do it!  The smart decision, however, is to discuss it with your tax professional and make sure you are doing it the right way.


Need more information on your insurance options?

Contact us online to learn more

Contact Us

Close Accessibility Tools
Accessibility Controls Reset
Content Adjustments
Font Size


Line Height


Content Scaling


Highlight Titles
Highlight Links
Highlight Forms
Align Left
Align Center
Align Right
Focus Mode
Color Adjustments




Accessibility Statement

Despite our attempts to make this website accessible for everyone, there may still be some pages or sections that are not completely accessible, are in the process of becoming accessible, or do not have a suitable technological solution to make them accessible. Nevertheless, we are always striving to enhance our accessibility by adding, updating, improving its options and features, and incorporating new technologies.

We want to provide our users with the best experience possible, so we strive to support as many browsers and assistive technologies as possible.

If you wish to contact this website's owner, please use the contact form on the website.

Our User Interface Adjustment Options

Font adjustments - With this tool, users can modify font size, style, letter spacing, and line height for improved alignment and readability.

Color adjustments - Users can customize their color contrast profiles to light, dark, desaturated, and monochrome.

Content highlighting - Users can prioritize key elements such as links, forms, and titles.

Content focus - Users can enable focus mode to highlight the current page information based on their mouse movement.