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Wednesday, July 17, 2024

Gift of College: On a Mission to Increase Awareness and Growth of 529 Plans to Help the Next Generation Avoid Student Loan Debt

Gift Of College On A Mission To Increase Awareness And Growth Of 529 Plans
Eric Bank

Written by: Eric Bank

Eric Bank
Eric Bank

Eric Bank is an M.B.A. who has covered financial and business topics since 1985, appearing regularly on Credible, eHow, WiseBread, The Nest, Zacks, Chron, and dozens of other outlets. Eric specializes in taking complex subject matters and explaining them in simple terms for consumer audiences, particularly in the world of personal finance. Eric holds a Master's in Business Administration from New York University and a Master's in Finance from DePaul University.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro
Lillian Guevara-Castro

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct journalism instructor at the University of Florida. Today, Lillian edits all CardRates content for clarity, accuracy, and reader engagement.

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Advertiser Disclosure

In a Nutshell: Headquartered in Phoenix, Arizona, Gift of College is an innovative platform that enables crowdfunding for college. The website allows individuals who are saving for college or paying down student loan debt to register their 529 plans and their student loans. Friends, family, and employers can directly contribute cash or gift cards to the registrants’ 529 plan and/or student loan accounts. The website also offers payroll deduction through API integration that allows employers and employees to contribute to 529 plans and existing student loans.

America’s student loan burden was overwhelming even before the coronavirus pandemic hit. Now, the situation is far worse, with millions of people thrown into unemployment and federal relief efforts uneven at best. Thankfully, Congress has provided a moratorium on payment of federal direct loans, Perkins loans, and Federal Family Education Loans until September 30, 2020.

Most prospective, current, and former students can use all the financial help they can get. The team at Gift of College is doing something about it. They’ve created a crowdfunding site for college savings and student loans that makes it easy for folks to provide educational financial support to loved ones, friends, and employees.

“I was Christmas shopping in a toy store for my nieces and nephews when it occurred to me that whatever I bought would end up in a garage sale,” said Gift of College CEO and founder Wayne Weber. “I started thinking about helping them save for college and soon found myself investigating 529 plans. But contributing was difficult, what with getting the recipient’s account number, printing out certificates, etc. My idea was to start something similar to the easy-to-use baby gift registry called The Bump. So that’s what we built. We built Gift of College as the first crowdfunding gift registry for 529s.”

Since then, Gift of College has expanded to allow contributors to help pay down a recipient’s student debt as well.

Kids with College Savings Are 6X More Likely to Pursue Higher Education

According to Weber, a child is six times more likely to attend college if they know someone is saving money for them to go, and college graduates can earn over $1 million more over their lifetime than someone without a college degree.

Gift of College was created to make it easy for kids to accumulate money in their 529 plans, thereby encouraging them to attend colleges, universities, apprenticeships, or other higher education schools. The organization set up a crowdfunding portal, not unlike GoFundMe, that allows recipients to register their 529 plans and/or student loans.

From there, it’s a simple matter for a donor to contribute with just a click of a button — no need to know account numbers or print certificates. Gift of College is now connected to 93 different 529 plans, which are virtually all of the direct and advisor plans in the country.

“To make it even easier, as the second step in late 2016, we launched the first-ever 529 student loan gift card. Our college gift cards can be found at Target stores across America. We’re also at and several other grocers, retailers, and pharmacies across the nation, making it easy for anybody to buy gift cards for 529s and student loans. In addition, many 529 plans have a Gift of College-powered gift card shopping experience on their own websites,” said Weber.

Employers Can Facilitate and Match Payroll Deductions into a 529 or Student Loan Account

Gift of College expanded further when Weber noticed that many employers were purchasing his gift cards to support talent acquisition and retainment.

“You know, if you’re trying to retain talent or garner new talent, a contribution to a student loan might be that thing that puts you over the top. It’s really a competitive benefit,” said Weber.

Gift of College CEO and founder Wayne Weber

Wayne Weber is the founder and CEO of Gift of College.

Accordingly, Gift of College launched a service to work with payroll providers, starting with ADP, to allow employees and employers to contribute to their 529 plans through payroll deductions.

As an example, Gift of College user Innovetive Petcare of Austin, Texas, set up employee after-tax payroll deductions that can go directly toward their 529 accounts. Furthermore, thanks to the CARES Act, employers can make tax-deductible contributions to their employees’ student loans of up to $5,250 per employee, who receive the contributions tax-free.

“Now, in addition to being a valuable financial wellness benefit, it’s also one that provides a win-win tax advantage to both the employer and employee,” said Weber.

New Tools, Rebates for Student Loan Accounts, and More Loan Providers Coming Soon

Gift of College, which currently has seven employees and tens of thousands of users, isn’t resting on its laurels. To start with, it is looking to expand its payroll partnerships beyond ADP.

“We are formally partnered with ADP from an integrated payroll processing perspective and we have done onboards and rollouts for companies with many other payroll providers too,” said Weber. “We are absolutely looking to make sure we can support as many employers and employees as are interested in our services. We’re particularly proud of our integrated relationship with ADP and will continue to offer work with employers who handle their own payroll or use other providers.”

Gift of College Gift Card

Coming up on the horizon is a shopping tool that will allow Gift of College users to direct rebates into their student loan or 529 accounts. In addition, the organization wants to expand its associations with loan providers.

Currently, it works with about 50 student loan providers and all 529 college savings plans, including all the majors for federal loan servicing and all the major private lenders. It adds new ones as customers request them.

Last year, the company added its sister brand, Gift of Independence, which provides a gift registry for Achieving a Better Life Experience (ABLE) accounts, known as 529A accounts. This type of account is for Americans with disabilities, allowing them to save for disability-related expenses in the same fashion as consumers would save for a 529.

“Our core mission is to increase awareness of 529 college savings plans and minimize student loan debt for the entire next generation,” said Weber. “And yeah, our future is focused on continuing our mission of creating products and innovations that popularize 529s and help students handle or avoid education debt.”

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