Pay Someone Else's Kid's Tuition - how to set up a college scholarship fund - Brief Article

Kiplinger's Personal Finance Magazine, Sept, 2001 by Kimberly Lankford

Q & A | How to set up a college SCHOLARSHIP FUND.

My father, a high school English teacher for many years, recently passed away. He loved literature, and we want to set up a college scholarship in his name. How can we do that? --JOHN BARNHILL, Hawthorne, Cal.

The development department at, say, your dad's alma mater would no doubt be happy to work with you to set up a scholarship fund. You'll probably need a minimum of $20,000 to $50,000 to endow a scholarship. The award or awards will be paid out annually from the earnings (the principal isn't touched). A few colleges will let you endow a scholarship with less, but at current interest rates, you'll need about $25,000 to generate an award of more than $1,000. At the University of Wisconsin, a $90,000 endowment will generate enough cash to fund a scholarship for a full year's tuition for one in-state student each year.

There is usually no limit on who may contribute to the endowment, so relatives and friends could help fund the scholarship. The college will help you set the terms of the scholarship--deciding whether it will be need- or merit-based, and adding any specifications you may choose, such as open only to English majors who want to become teachers. K -- KIMBERLY LANKFORD