<p>My son is studying to be an opera singer. He has several “patrons” (former church members) who support him with annual cash gifts. They have known him since he was young and believe in his potential. Son graciously accepts the gifts and, this past summer, went back to visit and perform a concert for them and their friends. They don’t actually pay for his tuition, but he has used it for other career-related uses (a summer program in Florence, two new tuxes (regular and tails), his accompanist’s fees, etc). These folks are all older (with grown kids of the their own) but are delighted to be able to help son. </p>
<p>I would have a frank and open discussion with these friends and talk about how much they’d like to contribute, for what purposes, etc. Your D should report any gifts on FAFSA. </p>
<p>So the gift tax is not pertinent, but it is possible your daughter might not be considered your dependent any more.</p>
<p>What I see is that the main choices are (and I will take this up with my dad because he wants to help my children go to college but isn’t sure how to do it in the best financial sense):</p>
<ul>
<li>a loan with standard interest (which could be forgiven later and terms can be flexible) or</li>
<li> the neighbor pays the tuition or part of the tuition directly to the college.</li>
</ul>
<p>It is a very nice offer and it can be done. My H and I have done it for the children of a longtime friend whose financial situation changed drastically due to the early death of her H. You can have it set up so that the funds are in an account and so that you know that those funds are available and not have to worry about anyone reneging on the promise. Have a lawyer involved, draw up the papers, it’s fairly simple to do. If these dear friends are serious about their offer, what a wonderful opportunity that is. Generosity is a gift that is beneficial to both parties and it is a great example to the recipient to embrace the opportunity to help others when one is able to do so.</p>
<p>First…wow…what an interesting problem to contemplate!</p>
<p>The thing that I would worry about is…what if they pay for year one and then for some reason no longer have the funds or inclination to pay for the rest. Heck…they could move, or break up or die…the point is…you never know! Your kid is then stuck at a school that you can’t afford…very problematic.</p>
<p>The way to make sure that this can’t happen is to open up a 529 for your D.</p>
<p>You could have your daughter look at the reaches and the affordables and if they bring it up again, say that if they are serious that you are willing to explore this…You would have a mechanism to ensure that their money is only used for tuition…like a 529 or a trust. That to go further with this you would need to know what they could commit too.</p>
<p>Curious, OP, what does your daughter say about all this? Does she know???</p>
<p>I think as a parent, I would be CLEAR to her that while this is a wonderful offer/prospect that she needs to be very confident and willing to look at other safeties and be satisfied with them. In other words, don’t let her rely on this neighbor offer to be a sure fire ticket to the more expensive schools. </p>
<p>When our S was in preschool, my BIL kept saying we were being unfair to him by having him attend public school instead of private school and said several times that he’d pay for S to go to private school. We politely declined but sent him to public school for K-8th grade. In the meantime, he had expenses of his own and ended up sending his own kids to public school thru 5th or 6th grade and then transferring them to private school. He never renewed his offer to pay for our kids’ tuition nor did he ever gift them with any especially generous checks to help pay their tuitions.</p>
<p>My SisIL on the other hand never said a word other than that tuitions were expensive and wrote checks whenever she could, gifted to us to help defray the costs of tuitions for private HS and later college. Her help was greatly appreciated, but we would somehow have scraped together enough $$$ to make things work out for our kids.</p>
<p>I guess I am also concerned that if you plan with your neighbor’s generous offers in mind but then things change and they don’t have the funds they thought they did, will your D be forced to transfer to less expensive public U after all and will YOU be saddled with huge loans? THe most important U is the one that the degree is from rather than the one the kiddo starts out from. Perhaps kiddo could start at less expensive U and then transfer if the neighbors really put funds where their generous offers are and she might only need two years of expensive tuition instead of 4.</p>
<p>@SCDraperPrice - Kindness, as a virtue, is blind to external factors. People are only nice because they want to be. Therefore, what you question does not even matter.</p>
<p>OP,
If D. has good stats, why she would not look into an option of free UG education? She definitely deserves Merit awards for her hard work. My D. was on full tuition Merit award (and more) for all 4 years, she considered it as a great award for her graduating #1 in HS class. Why to give it to somebody else? Grab it, she deserves it!!!</p>
<p>I agree with those who say that it’s fine to accept this offer of help, as long as it’s structured sensibly, and as long as the student isn’t depending on unenforceable future promises of help.</p>
<p>You all have amazing insights! And i had kind of forgotten this story but we have friends with a college buddy who sold his company and then put <em>their</em> kids through college. So it does happen. </p>
<p>On the wealth issue, I guess we’re like lots of people…two incomes, two kids, lots of taxes, aging parents, our own retirement…i’m sure we’ll get <em>something</em> on financial but there is nothing in our life that is going to allow us to write four $60,000 checks. As far as the neighbors, don’t underestimate the financial security that two gay men in their fifties, without kids, and with great smarts, can amass over a lifetime…in any case, I’m going to give them both a big hug, assure them that our D loves them now (and she does) and will love them in the future and that we’ll never forget their kind offer…not accepted but always remembered. </p>
<p>I just can’t imagine taking $60,000 in money from my neighbors for ANY purpose…any. This student certainly should have options that are within the means of her own family.</p>
<p>We really like our neighbors, but is can’t imagine having a conversation about our personal finances, and college costs with them. </p>
<p>Well, people do set up scholarships, usually to honor someone they have lost, the difference is that the donor doesn’t usually know the recipient because a third party arranges everything. Bringing in a third party to handle money would be wise for the reasons already given. Things change, and it would be very awkward should anyone involved have a change of heart. A trust of some kind would be prudent. Related to this topic, we have found that “bills paid on your behalf” is a category which can sometimes be used to calculate income. In other words, parents make $ 50 K a year and grandparents pay tution bills of $ 25 K. All of a sudden your income is considered $75 K. So yes, be aware of how it would work best for your FAFSA, etc. </p>
<p>I would be way of choosing a school based on this </p>
<p>Are these neighbors who have become family friends? Or just friendly neighbors? I would feel awkward accepting an offer from the latter, but probably OK with the former, especially if it was set up sensibly. One concern I guess would be – what if something happens, and they can’t continue contributing for whatever reason? Would you be able to cover the difference?</p>
<p>FWIW, I know a childless couple that gave $20,000 per year to their friends, which allowed the friends to send their daughter to a fancy-pants-private across the country. The girl knew about the arrangement, and was always very grateful. But the couple didn’t want gratitude,so much as they wanted to be a part of a young person’s wonderful college experience. They could afford it, and it made them feel good to do it. Years later, they kicked in a huge amount for the girl’s fancy-pants wedding, too. We should all have such great friends !</p>
<p>Wonderful offer, but I would graciously decline. The last thing you want is to be put in a situation where something happens to your neighbor’s financial situation (divorce, illness, death) and now you and your daughter have to take out loans that you wouldn’t have otherwise needed to take out if you elected to go to a cheaper, and more affordable school (Talk about a run on!). Also, I feel like accepting their offer will blur the line between friend and parent. It may become uncomfortable if they begin to take on the role of a parent because they are doing your job. I feel like the burden to pay for college falls on the parent. If you can’t afford a certain school, then your child should not be going to that school.</p>
<p>I think it’s fair to explore making this work. Is this gay couple childless? I don’t want to assume that, but if they are, and as is stated they love the daughter, this could be meaningful for them. Why deny them the satisfaction of putting a young person through college? Yes, they could just donate it to a charity, but they get to see this young lady reap the benefit of their gift, and that’s really something special. How lovely they have that relationship where they both wanted to offer and felt comfortable doing so. I would not reject out of hand, but I would have very frank discussions about exactly how this would all work.</p>
<p>“Our D has good stats and is looking at some pricey colleges – Georgetown, UPenn, Uchicago, etc. - as well as our decent state universities (that will be essentially free with her stats).”</p>
<p>I’m not sure what state you are in but if your D can go free to your state university… is a degree from “Georgetown, UPenn, Uchicago, etc.” actually worth $240,000 more than State U? </p>
As far as the neighbors, don’t underestimate the financial security that two gay men in their fifties, without kids, and with great smarts, can amass over a lifetime…in any case, I’m going to give them both a big hug, assure them that our D loves them now (and she does) and will love them in the future and that we’ll never forget their kind offer…not accepted but always remembered. </p>