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Savings Social Networking Programs

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Savings social network sites try to encourage friends, family and businesses to contribute to a child's college education. These facilitator or "college registry" sites make it less awkward to ask for support. Some may also provide a benefit to the donor, such as updates on the child's academic progress. The donor can use their contributions to encourage the student to get good grades and succeed in school. The sites may automatically solicit contributions before important events, such as birthdays and graduations. This helps the contributors avoid the embarrassment of forgeting a special occasion. They may also include a rebate component similar to those of the credit card loyalty programs.

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These sites leverage several recent trends in higher education:

  • College students create secure online "portfolios" of their academic work that can be viewed by friends and family.
  • Organizations like The "I Have a Dream" Foundation (IHAD) allow businesses to 'adopt' a class of low income students and promise to sponsor their college education.
  • Social networking sites that are popular among students like Facebook and MySpace.

Savings facilitator sites include:

The following additional college savings facilitator sites appear to be defunct:

  • College Piggy ($4.99 monthly fee)
  • SchoolRaise.com (5% fee per contribution upon distribution)
  • TuitionGifters.com ($39.95 per year)

There are also social fundraising sites that are not specific to saving for college, such as Piryx (4.5% fee per contribution).

Another site, EduLender (no fees), is more focused on helping students raise money to pay off their student loans.

The sites restrict access to a child's portfolio to just those friends and family and businesses authorized by the parent. A key focus is on protecting the student from the untamed wilds of the web.

Some of the college savings loyalty programs also have social networking features. For example, Upromise allows friends and family to set up Upromise accounts that funnel their rebates into your account and also offers a "Guest Shopping" URL for people who are not Upromise members to use to direct college savings rebates to your account.

See also the Fastweb article How To Ask Friends and Family for Money for a Child's College Savings Plan.

Caveats

It remains to be seen whether these registry sites are effective tools for building a college savings fund. While they avoid the awkwardness of personally asking for money, personal contact is often essential to successfully raising money. These sites are already at a disadvantage due to the impersonal nature of email. Will they be able to overcome the limitations of the medium? Will they become as commonplace as wedding registries are today?

Another open question is whether these services are worth the cost. $40 a year at 4% interest for 17 years is the equivalent of nearly $1,000, with two-thirds coming from fees and the rest from interest.

Finally, the fact that several such sites are no longer operational raises questions about the safety of relying on such a site. Families should avoid any sites that do not immediately transfer the funds into the student's college savings plan.

 

 
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