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Saving for College: A Step-by-Step Guide for Grandparents

By James Ray, Senior Education Savings Specialist at TIAA

April 2016

Step 1: Choose a 529 college savings plan.

You can enroll in any plan, no matter where you live or where your grandchild plans to attend college. You’ll want to consider the plan’s costs (including fees and sales charges), any tax advantages or state tax deductions the plan may offer, contribution limits and investment options.Compare Plan Costs at a Glance.

Step 2: Choose an investment option.

With a bit of research, you can select an investment option that works with your risk tolerance and long-term goals. Most 529 college savings plans offer two main types of investment options: age-based and fixed. No matter which you choose, your investments will be professionally managed and monitored.Explore Types of Investment Options.

Step 3: Open an account.

You’ve done all the research, now you just need to open an account and make your first contribution. Some grandparents make larger lump-sum contributions as an estate-planning strategy, while others set up automatic monthly contributions that work with their budget. Any earnings on your account will continue to be invested and are exempt from federal income taxes (as long as the funds are used for qualified educational expenses). Read More About Making Your Account Work Best For You.

Read other articles from our “Latest from James Ray” series here.

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