As if there isn't enough for parents to worry, paying for a child's education continues to get more expensive. For the 2022-23 school year, the average published (sticker) tuition and fee price is 1.65 times as high as it was 30 years ago at public two-year colleges, 2.25 times as high as it was 30 years ago at public four-year institutions, and 1.8 times as high as it was 30 years ago at private nonprofit four-year institutions (after adjusting for inflation).1
Given the steep price and the well-documented financial impact of student loans, it may be worth asking your friends and family to contribute to your child’s education with a gift to their 529 college savings account. It's likely that the people who know and love your family give gifts at birthdays and holidays. Instead of toys and games, why not ask for a contribution to a 529 savings account? It's a gift that can have a lasting and meaningful impact.
Small amounts can add up
The great thing is that gifts to your 529 don’t have to cost a lot of money. There’s no minimum and every dollar helps. If 5 friends give $20 each for the first 10 birthdays of your child's life, that adds up to $100 a year. It's $1,000 over the course of a decade—plus any potential compounding investment returns that come with it.
If your 529 account is with Fidelity, you can create and share a link to your child’s personalized gift page with family and friends. From there, they can easily gift money online using an electronic check if they want to contribute. You can edit your gift page and track the gifts you've received from your private dashboard.
As the account owner, only you can access your dashboard, so your account information is kept private.
Consider this hypothetical illustration showing the power of gifting over time.
Gifts can supercharge your college savings
Local and state taxes, inflation, fees, and/or expenses were not taken into account. If they had been deducted, performance would have been lower. The hypothetical is not intended to predict or project the investment performance of any security.
Past performance is no guarantee of future results. Your performance will vary and you may have a gain or a loss when you sell your units.
Tips for asking for gifts
Research has found that people may feel uncomfortable about asking for a gift to their child's 529 savings account. But it can be worth getting over that initial discomfort and speaking up.
Giving gifts to children is one of life's great joys—it usually makes the gift-receiver very happy and that makes the gifter happy. But children may not immediately appreciate the long-term gift of education in place of the next amazing toy or game. So it can be important to make sure that your child understands how important their education is and the value of saving for the future.
Read Viewpoints on Fidelity.com: Tips for raising a saver
To get your friends and family, and your children, to understand the significance of gifts to a 529, consider these 7 tried-and-true strategies straight from Fidelity customers.2
You could even get your child to actively participate in saving by keeping them updated about the balance in their 529 account. Give them the option of saving some of the money they get as gifts or allowance. On birthdays and holidays, you could offer to match any cash gifts put toward college. Family members might be interested in doing that too!
Gifting can help with estate planning
Gifts to 529 accounts can also help with estate planning. Gifters can contribute up to $16,000 in 2022, and up to $17,000 in 2023, to a 529 account per person, per year with no gift tax ramifications. So a married couple could gift up to $32,000 per account, per year in 2022, and up to $34,000 in 2023, without having to pay a gift tax or erode their lifetime gift tax exclusion. Once the annual gift has been made to the 529 plan, the money is no longer considered part of the gifter's estate, for estate tax purposes.
The good news for people who receive gifts: When someone makes a gift to your 529 account, you generally will not owe taxes on the amounts.
The gift of education
However people choose to give, whatever amount they choose to give, every little bit helps to fund your child’s educational success. That can help give your child the tools they need to thrive throughout college and for the rest of their lives.