The Gift Parents Really Want for Their Kids This Year

The Gift Parents Really Want for Their Kids This Year

Put that Hatchimal back on the toy store shelf. The hottest gift for the kids in your life this year, according to their parents? A little help with future college tuition.

A new holiday survey from Fidelity Investments found that 84% of parents would welcome gifts of college contributions for their children from friends and family instead of traditional presents.

That choice might stem from parents' own experiences paying for their higher education: 74% of moms and dads said they would have been fine with receiving fewer gifts and more cash for college when they were growing up, according to the survey.

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Today's families could likely use an assist: A separate 2016 Fidelity study found that parents are only on track to meet 29% of their college funding goals.

If you're thinking an infusion of college cash could be your gift of choice this season for a niece, nephew, grandchild or friend's little one, here are some ways to consider giving.

Contribute to a child's 529. These state-sponsored, tax-advantaged savings accounts are typically set up by parents, with their child as the beneficiary, to help cover qualified educational expenses like tuition or room and board.

But it's not just parents who are allowed to contribute; third parties can contribute cash gifts to the account as well. (Parents can even make donations easier by using 529 gift-giving services like Ugift, which help streamline electronic donations to their 529 account.)

One note of caution for eager-to-contribute family members: You probably want to avoid setting up a 529 account in your name and designating the child as the beneficiary, says Matt Shapiro, CFP®, a financial planner with LearnVest Planning Services. Why? You could be hurting their financial aid calculations down the road.

For example, if the account is set up with the grandparents as the owner and the child as the beneficiary, 529 withdrawals would count as the student's income in the year the withdrawal is made on the Free Application for Federal Student Aid (FAFSA). And students' income is more heavily weighted in calculating the Expected Family Contribution—which could result in reduced aid, explains Shapiro.

Donate to college crowdfunding. These days, it's not unusual for people to use online fundraising platforms to help meet specific financial goals. Sites like iSow and Future College Fund act as part crowdfunding platform, part gift registry by allowing kids and their parents to designate a savings goal that outsiders can help contribute to on gift-giving occasions like Christmas or birthdays. See if the parents of a child you'd like to gift to has something like this set up—or suggest that they start a goal that all their friends or relatives can contribute to.

Simply write a check. Assuming you trust the parents will save any monetary gifts you give them for their child's education, you could just write a check out to them that they can deposit into their child's college savings account of choice. If you want to make the check look a little more special, tuck it into an age-appropriate book the child will love.

RELATED: The Ins and Outs of 529s: What You Should Know About College Savings

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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