CollegeBacker 529 savings plan review December 2018 | finder.com

CollegeBacker review: Save for college with family and friends

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CollegeBacker
  • Higher rates of return possible
  • Fees are optional
  • Friends and family can pitch in
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An innovative way to pick a 529 college savings plan and also rally help from your friends and family.

Needless to say, tuition isn’t cheap. So the earlier you can start saving, the better. College savings accounts — or 529s — make saving for tuition and other related costs easier with tax benefits and financial aid incentives.

CollegeBacker takes savings a step further by matching you with a top-tier 529 plan and allowing you to get help from friends and family through crowdfunding.

Fee$0
Minimum deposit to open$0

What are the benefits of a 529 savings plan with CollegeBacker?

CollegeBacker’s secure, tax-exempt 529 savings plan offers several benefits to help you save for the costs of higher education.

  • High rate of return. Based on the historical performance of the S&P 500, CollegeBacker predicts an 8% rate of return against 5% inflation. $100 invested before a child’s first birthday could grow to as much as $500 by the time they turn 18.
  • Optional fees. CollegeBacker doesn’t charge any service fees, but you’ll have the option to pay up to $10 per month. And 10% of your monthly contribution will go towards helping low-income families prepare for college.
  • No contribution limits. Besides the $15,000 federal gift tax exclusion limit, there’s no cap to how much you can contribute each year.
  • No minimum balance. You can start saving for college with as much or as little as you want.
  • Options and flexibility. CollegeBacker offers a highly-rated 529 or age-adjusting investment option. But if you don’t like the options in your state, you can open a 529 from another state, even if you don’t live there.

What should I look out for?

  • Withdrawal penalty. If you make a withdrawal and spend the funds on anything other than qualified post-secondary expenses, you’ll pay a 10% tax on the investment earnings.
  • No guaranteed return. Unlike savings accounts, CDs and money market accounts, 529s don’t have guaranteed returns.
  • Management fees. Though CollegeBacker doesn’t charge any management fees, the institutions overseeing the funds they select do.
  • No branches. CollegeBacker operates entirely online, so you won’t be able to visit a branch if you need assistance.
  • Credit/debit fees. There’s a 2.9% plus $2.95 fee when you or anyone else makes a contribution by credit or debit card.

Are contributions to CollegeBacker 529 accounts tax deductible?

You could claim state income tax deductions or credits if you’re the owner of the account, but it depends on your state of residence:

  • AZ, KS, MN, MO, MT, PA and UT allow you to claim certain state tax benefits for contributions made into any 529 plan.
  • AB, AK, CO, CT, GA, ID, IL, IA, LA, ME, MD, MA, MI, MS, NE, NH, NM, NY, ND, OH, OK, OR, RI, SC, VT, VA, WV and WI only provide state tax benefits for contributions made into their state plans.
  • AK, CA, DE, FL, HI, KY, NV, NJ, NC, SD, TN, TX, WA and WY do not provide any additional state tax benefits for contributions made into a 529 plan

How do I open an account?

CollegeBacker makes it easy to open a 529 savings plan online:

  1. Visit the CollegeBacker website and click Start Saving for College Today.
  2. Create a plan by entering your child’s age and savings goals, then click Create Profile.
  3. Enter your personal information and beneficiary details then click Create Fund.
  4. Once your application is finalized, invite friends and family to contribute.

Eligibility

To open a 529 through CollegeBacker, you’ll need to meet a few eligibility requirements:

  • Valid Social Security number or tax ID number.
  • Valid US address.
  • Age 18 or older.

Required information

You’ll need to provide the following information when opening your account:

  • Name, date of birth, address, phone number, gender and email.
  • Social Security number or tax ID number.
  • Beneficiary information.
  • Savings goals.

Funding options

CollegeBacker allows you and your peers to make contributions using the following methods:

  • Bank transfer
  • Debit card
  • Credit card

How can I get in touch with customer service?

  • By phone: 844-728-3529
  • Email: support@collegebacker.com
  • Live chat via the button in the bottom right-hand corner of the website

Bottom line

CollegeBacker is a unique product that invites friends and family to contribute to your college savings account. It combines a top-tier 529 savings plan with convenient crowdfunding to help you reach your goals faster. However, returns aren’t guaranteed and it doesn’t issue accounts directly, so if you’re looking for a more traditional approach, you may want to compare your options.

Frequently asked questions

Peter Carleton

Peter Carleton is a writer at finder.com who specializes in credit cards, life insurance, mortgages and more. In his free time, you can find him cooking, writing or honing his skills in WordPress development.

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