Grandparents increasingly kicking in to help fund grandchildren education
LOS ANGELES: A healthy chunk of Australian grandparents are dipping into their savings to help fund their grandchildren’s education, extensive new national analysis shows.
In the first research of its kind, the ways and extent to which grandparents are contributing to their grandchildren’s education has been explored.
It also investigates to whom the older generation plans to leave its wealth.
The research by McCrindle Research was commissioned by Futurity Investment Group with data collected from 1,000 Australian grandparents with grandchildren in formal education.
It found three in 10 grandparents financially support their grandchildren’s education with average contributions of about $2,000 per grandchild, each year.
McCrindle director of advisory Ashley Fell said the results were fascinating, adding facts and figures to hearsay.
“Grandparents recognise the critical role that education plays in setting up young people to succeed in life,” she said.
“Nearly two in five expressed concerns regarding their grandchildren’s education, specifically, the cost of education limiting education prospects (38 per cent) and education not equipping students with the necessary skills for the future (38 per cent).”
Many are also concerned by the rising cost of education.
“These concerns are not unfounded … parents are having to make significant financial contributions for even the most affordable of the three sectors.
“The average cost for 13 years of schooling in the Catholic education system is now estimated at $173,706 while for independent schools it is $288,880.”
The study revealed many grandparents were drawing on personal savings to contribute to their grandchildren’s education.
“This further demonstrates their commitment … 65 per cent of those who contribute financially are using their personal savings (while) one in five grandparents (23 per cent) are using their pension payments to make financial contributions.”
The research found grandparents were most likely to pitch in when there was a specific need or opportunity.
“Four in five grandparents (78 per cent) are choosing to provide their financial support on an ‘at-need’ basis with one in four (25 per cent) preferring to provide regular contributions,” Ms Fell said.
“As well as contributing to school fees, 40 per cent help buy school supplies and 25 per cent contribute financially to co-curricular and extra-curricular activities.”
The research reveals one third of grandparents plan to leave at least 50 per cent of wealth to grandchildren and 10 per cent plan to leave 100 per cent
“More than half of all grandparents hope the inherited wealth will be used to help purchase a property, a third hope it is used to fund education while a quarter want the money spent on travel and life experiences,” Ms Fell said.
Futurity Investment Group CEO Sam Sondhi said the research provided some unique insights into the“financial, practical, and academic contributions” of grandparents.