Help! My Daughter Stole My Granddaughter’s College Fund.

Dear Prudence,

My husband and I sent money to each of our two grandchildren for their birthdays and holidays, having agreed that their parents would put the majority of the money in a savings account for college. We never thought to set up separate accounts ourselves because we trusted our children. Our grandchildren both started high school this year, and the college conversation started while everyone was visiting. Our grandson asked his father how much money was saved for him and was told it was $9,000. His cousin started to ask her mother, but our daughter changed the subject. Later we pressed our daughter on the subject privately. She confessed that there was no money left. Both of us were shocked because as far as we knew, our granddaughter hadn’t taken expensive lessons or gone to camp. Our daughter refuses to explain herself and demands we make it right. My husband is furious, and I am frightened of the future. We haven’t told anyone what our daughter has done. I work part time but all my money has been going into our retirement. We don’t want to disappoint our granddaughter, but covering up our daughter’s theft does not sit well with us. It will break our granddaughter’s heart if she finds out what her mother did. Please advise.

—Missing Grandparent Funds

As painful and bewildering as this situation is, I hope you can remind yourself that your granddaughter has other options to bring down the cost of college (scholarships, community college, applying to in-state schools) and that $9,000 was never going to buy her a debt-free education. That knowledge doesn’t solve anything, but it will help you maintain perspective and keep you from thinking your granddaughter is doomed. I do think you should be honest about what’s happened with both your daughter and granddaughter, because my fear is that if you don’t, your daughter will invent a story where you’re to blame. I want to believe that she did what she had to out of desperation and that she kept it from you out of shame. But even if that’s the case, even if she stole the money to pay bills to keep their heads above water, I worry that she’s so guilty and defensive and uncommunicative that she’ll lie to her daughter and claim you never sent her the money, digging herself deeper into a hole and taking you with her.

You don’t have more money to give your granddaughter. You can’t go back in time and open a 529 plan at her birth. The best thing you can offer her (and her mother) is a practical conversation about what resources she does have so she can start to make informed decisions. I’d encourage you and your husband to speak as calmly as possible during the conversation—recriminations and emotional outbursts will only make your granddaughter feel worse and increase the odds that your daughter will remain defensive. Be honest about what you do and don’t know. Your granddaughter likely will be upset that her mother used her college money for something else, but there’s just no way you can spare her that blow. You don’t have more money to give her, and you certainly can’t pretend you never sent the money just so your daughter can save face. The best and kindest thing you can do is offer your daughter another opportunity to come clean. Letting her know that you’re willing to talk about it with her, forgive her, and come up with an opportunity for her to try to make things right. In the meantime, your granddaughter needs to know she can’t count on your money when it comes to making her college plans.

from Human Interest - Slate Magazine 

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