Parenting Pointers: Crowdfunding 529s

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College costs are rising 8% annually and student loan debt currently exceeds credit card debt. One company is using crowdfunding technology to change the way parents save for their child’s college education.
With GradSave, parents, friends and families give directly to a child's college savings plan, instead of giving material gifts or "trinkets" that will likely wear out over time for birthdays and holidays. A GradSave account is linked directly to a 529 savings plan, so earnings accrue and are withdrawn tax-free. The gift-givers know that gifts are going directly to a child's college savings plan.
Marcos Cordero, GradSave CEO and Harvard MBA, answered a few questions about GradSave and 529 plans. 1) What are the advantages of settingup a 529?
Thetwo main advantages to a 529 savings plan are that the deposits are state-taxdeductible (in most states) and interest and earnings accrue tax-free. Interest alone can significantly accelerate savings. When it comes to college savings, tax-free compound interest can beamazing. For example, say you, your child’s grandparents and one morerelative each save $25 every month for your toddler’s future college savingsplan. Well, in 19 years (Halfway through the toddler’s education) theamount saved would be $35,284 AFTER TAX paid on the growth. However, ifthat money is saved in a tax-free 529 Savings plan it has a doubleeffect. No taxes, so you save $5,350, but also that money that would havegone to the tax man also compounds interest and grows on it’s own. So youreally end up with  $42,943, which is $7,659 additional savings. 

2) How does the crowdfunding aspectwork?
Crowdfundingwith GradSave was designed to be simple and user-friendly. Once on the GradSave website, users create afree account, which can even be done with one-click sign-up via your Facebookaccount. You can import pictures fromFacebook or upload from a computer file. Once the account is set up, users share their profiles using a uniqueURL (i.e. www. gradsave.com/Marcos) with friends and family via social mediaand email to let them know the child is saving for college. Gift givers then use the easy one-click“donate” button to gift college funds by using a credit card, even directdeposit.
Then, userstrack progress and watch college savings grow closer to their goals with apersonalized savings “thermometer." GradSave also allows users to track history on who has gifted, makingwriting thank you notes easier. Userslink their GradSave account to any 529 savings plan, a tax-free savings accountwhen used for higher education (until the 529 is linked, money is FDIC insuredat Bank of America).
Over years,students continue saving and sharing their goals with friends and family,because it really does “take a village” to raise a child in modern economictimes. GradSave is also excited to soonoffer the recurring payment option. Withrecurring payments, those who want to give regularly can do so hassle free forimportant occasions or every month, ensuring the gifts are going directly tothe savings account and truly embodying the essence of crowdfunding.

3) Why should someone give acontribution to a 529 instead of a more traditional gift?
Traditionalgifts are nice, but will likely wear out over time or are forgotten over theyears. By donating to a 529 you aregiving two gifts that really matter and last: a college education and relieffrom student loan debt. You can feelgood that you are bringing the one you love closer to his or her dreams. Infact, we get many emails from gift givers saying how excited they are to givethis gift, because it’s meaningful, it’s thoughtful, and it’s responsible.
4) How can parents direct gift-giversto contribute to a 529 instead of something else?
Lettingyour friends and family know you are saving for your child’s college fund andyou would like them to contribute is very easy. GradSave isspecifically designed with social media integration, which allows you to letyour Facebook friends and Twitter followers know you are working towards aspecific goal. You can even keep themupdated with your progress by “sharing” via GradSave email updates. The idea here is that when someone makes acontribution gift they will share via their social networks, letting othersknow that you are making substantial progress towards your goals andencouraging them to give you gifts, too. 
Wealso see many parents include their child’s dedicated URL in E-vites and evenpaper invitations to their child’s profile. E-vite is one of the most successful sources so we certainly encourageparents use electronic invitations when possible.
There are alsonumerous crafted numerous e-mail templates for every occasion to send tofriends and family, to make it even easier, and give you wording ideas. We’ve made it as easy as possible for collegesavings to be the “go-to” gift idea for birthdays and holidays.
5) What can moneyin a 529 be used for?
Money in a 529 can be used for any qualified educationcosts, including but not limited to tuition, fees, book, supplies, etc., it’sactually a fairly broad. Qualifiedexpenses also include room and board, which most scholarships and grants do notcover. Basically, expenses that arerequired to attend are covered (this can even include computers and otherequipment).