4 Ways to Leverage Gifts from Relatives into College Savings
Have you ever had a grandparent, aunt, or uncle ask what to get your kids for the holidays? It happens every year to me. This year, consider a different response. Encourage them to balance physical gifts with college savings contributions. Check out these methods for how to give the gift of college savings.
Make Contributions to Your Existing 529 Plan
Many 529 Plans have easy ways to encourage others to make additional college savings gifts. If your 529 plan is administered by Ascensus like Arkansas 529 GIFT Plan, College Savings Iowa 529 Plan, DC College Savings Plan, KY Saves 529, MOST-Missouri's 529 Savings Plan, Pennsylvania College Savings Program 529-Investment Plan, and many others, you can get a Ugift code as the 529 plan owner to share with family and friends. Gifts can be made by going to the Ugift website, plug in the code, and use the free-to-use service to transfer money from a bank transfers or checks. At this time, no credit cards or debit cards are accepted for these gift transactions. Depending on the 529 plan, gifts can be made for as little as $15.
Alaska 529 or T. Rowe Price College Savings Plan created GoTuition Gift Portal, California’s ScholarShare created eGift, and CollegeBacker created Gifting Pages to make it convenient to ask family and friends to contribute to college savings. For GoTuition, create an account, then make a customized profile page with a personalized welcome message and photo, and share the link to the page via email or social media. For eGift, log into your existing ScholarShare account online, select the eGift, and create a custom email invitation to send your contacts. For both of these services, gift givers can send the funds as a bank transfers or completing a form and sending via mail. For CollegeBacker, just go to your account, claim your gifting page, andc. CollegeBacker supports payments from bank transfers, credit cards, and debit cards.
Send a Gift Card
There are a few options to give in the way of physical or electronic gift cards. Virginia529 Plan has worked with Walmart.com and a bunch of Target and H-E-B Grocery store locations to offer the Invest529 gift card. Depending on the location, gift givers can purchase the cards for $25 to $200 denominations. Also, GiftofCollege.com created gift cards that can be applied to any 529 Plan. GiftofCollege.com gift cards can be purchased at over 3,000 retail store locations including Target, H-E-B, Fred's, Save Mart, Brookshire Brothers, Barnes & Noble, Lucky Supermarkets and FoodMaxx. Gift givers can purchase the cards for $25 to $200 denominations. Just be aware that gift givers are assessed a 5% processing/service fee typically capped at $15 per transaction for this service.
Buy a US Savings Bond
I know this is old school. In fact my Uncle Paul and Aunt Carol gave me a college savings bond when I graduated eighth grade to help me save for college. The US Treasury Department issues Series EE savings bonds as a low-risk savings products that pay interest for up to 30 years. Plus, the bonds can be redeemed federal taxes free to help pay for for qualifying higher education expenses. Although they don’t issue paper bonds like they did back in the old days, they make it super convenient to by them as a gift at Treasury Direct.gov. The minimum purchase is $25, and the current rate as of December 2019 is .10%. Just know that you’ll need to share your kid’s name and social security number for the bond to be issued.
Use cash or check
For some, putting a $20 bill in a card or writing a $100 check is just easy. If a family member or friend gives cash or check, welcome the gift and then ensure that it gets into your kid’s college savings account. In fact, even if the gift giver did not earmark their gift specifically for college savings, then talk to your kid about putting all or a portion of these cash gifts into college savings to grow the gift over time and invest in their education.
By encouraging family members and friends to contribute to savings, you are promoting investing in your kid’s future. This will enhance their feeling of being a stakeholder in your kid’s postsecondary education. Plus, you can feel good that every dollar saved now curbs your and your kid’s need to take out student loans to pay for college costs.
Colleen MacDonald Krumwiede is a financial aid and paying for college expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.