A wide variety of college and other educational savings plans exist to encourage people to save money for the future educational expenses of their children and grandchildren, as well as any other child for whom they may want to save. Unfortunately, without more information about your financial situation, I cannot say which plan is right for you and your grandchild. I encourage you to consult with a qualified financial planner to discuss the best savings plan for you and your grandchild, including the rates of return, risks, and benefits of various investment plans.
One popular option that you may want to consider is the 529 College Savings Plan, named after the section of the Internal Revenue Code that governs them. These plans are established and administered by the individual states, and each state determines the type of plan it will offer. All but two states offer a 529 savings plan. To read more about this type of college savings plan, I encourage you to visit www.collegesavings.org, where you can find out about the plans offered by your state and the eligibility requirements. Many states allow people from out-of-state to invest in their plans, so keep this in mind if you find a plan offered by another state that you prefer to those offered by your state. With so many different options available, I again recommend that you consult with a professional financial planner to help you determine the best plan for your needs. Please keep in mind that 529 plans are designed primarily for higher education expenses, such as college or technical school tuition, so you may need to consider other options if you are looking to save money to finance an elementary or secondary private school education for your grandchild.
One option for saving for lower level private school education is the Coverdell Education Savings Account. Like a 529 plan, these Coverdell ESAs offer tax deferred growth and tax free withdrawals, as long as the money is spent on qualifying educational expenses. To learn more about Coverdell ESAs, I encourage you to visit the Sallie Mae website covering the topic. This type of account may be a good choice since you are planning to finance a lower level education for your grandchild. You can contribute to both a Coverdell ESA and a 529 plan simultaneously, so establishing a Coverdell ESA for elementary and high school and a 529 plan for college tuition may be worth considering. Again, I urge you to speak with a professional financial planner to discuss your options.
Finally, a popular program used by many families is called Upromise. Upromise is a program that partners with many large companies who will make a contribution to your grandchild's college savings account when you purchase their products. While you are in no way obligated to purchase their products, many of the partners are companies from whom you may buy products anyway (like McDonald's, Exxon, and many more). To learn more about Upromise, and to review the list of participating companies, you should visit their website using the link provided above.
I wish you the best of luck in finding the best way to finance your grandchild's education.
I hope that the information I have provided helps you Find. Learn. Save.