Retirement living may be the time to help save for relatives'college costs

While those who are looking forward to retirement living may not have college in mind for themselves, they may be able to make gifts for relatives that could make college more affordable.

In states like Illinois, 529 prepaid plans allow parents and grandparents to put away money that will be used to offset future costs of education, and according to the state student assistance commission, lock in the rates for tuition as they are now, rather than what they will be when the child reaches college age.

Retirement living may be the time to help save for relatives' college costs

"To get the maximum benefit, you have to start early and lock in a child's college education at today's tuition prices," said Andrew Davis, ISAC executive director.

The plans allow those who have recently added new members to their extended family to start plans for newborns up to the age of one in the program, and there are benefits for the donor as well: up to $20,000 in funds may be tax-deductible, and whatever earnings are generated on the plan aren't taxed, says ISAC.

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