A recent Associated Press article reported that, “People have used crowdfunding sites to raise money for business ideas, help afford medical emergencies and even to pay for vacations. Now the concept is coming to college savings.
“More 529 plans, the accounts that give families a way to put away cash for college, are adding crowdfunding-like tools that make it easier for savers to ask family and friends to contribute to a kid’s college fund. Account holders can create webpages and share the links on Facebook, Twitter or in emails. Some parents have asked for cash contributions as birthday gifts instead of toys. Others have used them to boost the savings of a child who lost a parent. Money is withdrawn from the gift giver’s checking account and goes directly into the 529. There are no fees for the service.
“Among the 49 states that sponsor 529 plans, more than half have at least one plan that offer some kind of online gifting tool. Those in the industry say they expect more to add the service.”
The AP article noted that, “Franklin Templeton Investments, which manages New Jersey’s NJBest plan, launched a crowdfunding tool called Spryng in March. Account holders can set a goal on how much money they want to raise. Savers can share their personalized pages and goals on Facebook, Twitter or LinkedIn.
“Ascensus College Savings, which runs 529 plans in 18 states and Washington, D.C., launched an online platform as part of its Ugift service three years ago. Before that, account holders could only send emails to family and friends asking for contributions. Gift givers could then print out a certificate and send a check. Ascensus says $120 million in contributions came through Ugift last year, a 38 percent increase from 2015.”
