The social savings platform Backer – who assist parents in creating tax-free college savings accounts for their children, known as 529 accounts – is offering families a dollar-for-dollar match on donations this May 29 – the holiday raising awareness on the huge potential of college savings accounts.
Backer serves on the premise that if saving for college fees is turned into a collaborative process, it will go much further for families of all incomes. Hence why to mark National 529 Day – or May 29 – a holiday dedicated to celebrating investing in the future of the next generation, Backer is offering a $25 match for families who open a new account between May 24 and May 31, 2021. In practicality, this means that for the first $25 contributed monthly into its online savings account, Backer will match it with another $25.
Children who see others investing in their college education are three times more likely to attend college. 529s are the best way for a family to save for their children’s education, however, they are still hugely undervalued and underused: only 16% of parents have a 529 account in place for their child.
Backer’s platform opens a 529 account for families and allows friends and families to transfer into the account in one-off or repeat donations. Because 529s are tax-free investment accounts, the money grows over time. Its collaborative model has already helped families avoid over $50 million in student debt.
A family is far more likely to contribute money themselves if they are gifted a college savings account, which also encourages them to become more college-focused, recent studies suggest. Backer is rethinking the roadblocks to what is usually a complex and bureaucratic process, by opening 529 accounts for its users.
Backer’s platform is also raising awareness of the account’s benefits for lower-income families, pushing back against the stigma that 529s are exclusively for high-income households. Currently, 70% of Backer’s user base have a household income below $100,000, and 50% are non-white.
This May 29, Backer wants families to embrace the power of donating towards our children’s futures. There exists an unfounded stigma against giving money as a gift in the United States, and yet 84% of parents would prefer that type of gift if it was to serve their children’s education.
Putting money into a fund like Backer, where friends and family can donate in a process as simple as using Venmo, is also a way of bringing relatives closer together around a good cause. Two out of every five dollars contributed on the Backer platform comes from grandparents, relatives, and friends of the family, which is 30-times higher than the 529 industry average.
