Q We have two sons, the eldest is a senior in high school, the other is a sophomore. Our oldest son is considering going to the community college next fall. Recently, their grandparents gave them money to use toward college. For our oldest son, the amount exceeds what he would need for the community college. What would you suggest we do with the money?


A That's a thoughtful gift. I have a couple of suggestions. First, I would arrange for your oldest son to talk to his grandparents about what they would like him to do with the money he won't need to pay for community college. For instance, they might suggest that he save it so the money can be tapped to set him up for a new job or career when he graduates.

And he should tell them what his ideas are for the money and explain his reasoning. For example, years ago I was talking to a local restaurant owner and he told me his grandmother had given him money for his college education. He went to her and said he didn't want to use it for college. He wanted to open a restaurant. He had a vision. He had the drive. The restaurant business is risky, but she gave him her blessing. The rest, as the saying goes, is history.

The thing about community college is that it's often one stage in a longer educational process. So the money may still go end up being spent on his education. The so-called "two-plus-two" step is an increasingly popular choice for keeping down the overall cost of college. Your son goes to a low-cost, two-year community college. The annual cost of tuition and fees at a public two-year community college is around $2,400. He then transfers to a brand-name four-year university or college for the final two years of his education. His college sheepskin will be from the better-known school, but the price of the diploma will be a fraction of the cost of those who went to the college or university for the full four years. That might not be the route he wants to take, but I would save the money in case it's an option he might want to pursue in a couple of years.

In the meantime, I would put the money into conservative investments, essentially safe parking places for cash. A rule of thumb I like is that money shouldn't go into the stock market unless it can be left alone for at least five years.

Since he'll be graduating from community college in a few years, I would keep the money safe. He could put it into a savings account, a short-term certificate of deposit, or U.S. Treasury bills. Investments like these offer the assurance the money will be there when he needs it for the next stage of his career.

Chris Farrell is economics editor for American Public Media's "Marketplace Money." Send questions to cfarrell@mpr.org.