Student debt now totals over $1.3 trillion
and counting. It’s no wonder that many parents are creating college saving 529’s earlier than ever before.
Many parents find it awkward to ask for college savings, especially when many people prefer to give a tangible gift. But, what if there was a way to give the gift of college? That’s the basis behind the college gift card.
According to CEO and Founder, Wayne Weber, the initial goal was to “simple streamline the process and design a social savings platform that made it easier than ever for friends and relatives to help over-burdened parents save for a child’s college education.”
Gift of College
is basically a gift registry for college saving 529’s and student loan accounts that allow students or parents to register their college savings account and allows their friends and family to give online or purchase an actual gift card to use toward a student’s college education. The site also facilitates the process of giving and even allows direct contributions from employers or through an employee’s payroll.
At this point, you may be wondering: What’s the benefit of a 529 savings plan?
A 529 plan
encourages saving for future college costs with tax advantages. It’s smart to save for college in 529 plans because the money saved is not subject to federal taxes, and in most cases, state taxes. (This is usually true as long as withdrawals are for eligible college expenses, such as tuition and room and board.)
In order to receive the funds, the student or parent must set up a Gift of College account and link to their student loans or 529 plans.
While college funding contributions aren’t anything new, the idea of an actual real-life gift card is new to this service industry.
“This innovation is one-of-a-kind and puts a college savings plan in a tangible form,” Weber details within a press release.
The college gift card is sold online and, as of fall 2016, select Toys “R” Us and Babies “R” Us retail store locations. That way, soon-to-be parents can opt to register for college savings during life events (like showers, birthday, graduations) over additional toys that, let’s be honest, kids don’t always need. And, those shopping for a gift will be able to contribute college funding and
still give a physical gift.
It’s also simple to use and easy to find the recipient’s account. Those looking to give the gift of college simply need the child/student’s name to locate their Gift of College profile. In order to utilize the service and receive college funds, the parent or child/student must already have a 529 plan started in order to receive gifts from the company.
It’s important to note that not all plans are partnered with Gift of College, but they are working on adding more options and do already offer a multitude of partner companies. Parents (or students) looking to take advantage of this service may want to research which plans are partnered with Gift of College to ensure the ease of depositing gifted funding. You can find a complete list of their partners on the Gift of College