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Crowdfunding Your Way to College?


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About a year ago, Sareana Kimia desperately needed $14,692.91 to pay tuition for the University of Maryland College Park. Today she’s exceeded her goal by $15,318.09 amid the long list of personal and economic hardships. Of course it wasn’t a fairy godmother or a genie in a bottle but pretty close. These were complete strangers. 438 of them to be exact. They’ve come from all parts of the globe during a year-long campaign to help pay for Sereana’s Education on a personal fundraising website called GoFundMe. The site gives any individual the ability to raise funds from family, friends, and even complete strangers. All that’s needed is a mobile phone, a bank account, and a dream. 

Think crowdfunding your kid’s college education is beneath you? Think again. The practice is becoming more acceptable thanks to the combination of modern day technology and a certain type of investment account that is used to save for college called a 529 plan. There are basically two kinds: prepaid tuition plans and savings plans.

529 Plans

529 plans, also known as “qualified tuition plans” have been around since 1996. They are named after section 529 of the Internal Revenue Code which makes them pretty special.  A 529 plan is a tax-advantaged savings plan, funded with after-tax dollars, designed to encourage saving for future college expenses. They can be sponsored by a state, Alaska or Maryland for example, or by a state agency such as Pennsylvania Treasury, and even offered by financial institutions such as TD Ameritrade and Fidelity. Moms don’t have to pull their hair out trying to select the right plan themselves. Easily check which ones are offered by state and compare plans online at

Are 529 plans popular? You betcha. According to College Savings Plans Network, a clearinghouse for information about 529 plans, the assets under management in 529 plans nationally will be in excess of $250 billion for 2015. Source: The total amount of money invested in 529 plans has grown every year since they were first introduced in 1996 due in part to the rising costs of education and other significant advantages:

  1. You can start with as little as $50 to open an account.
  2. Earnings grow federal-tax free throughout the life of the account and will not be subject to annual income taxes tax when the money is taken out to pay for college expenses such as tuition, computer technology and related peripheral equipment. See IRS for what’s covered and what’s not
  3. Your state may also offer a full or partial tax break on state income taxes, depending on where you live.
  4. You can make 529 account deposits automatic, and therefore, easy to manage.
  5. The person that opens the account controls the money, not the student beneficiary.
  6. A 529 account is flexible and can pass from one family member to another, including children and their descendants, stepchildren, siblings, parents, stepparents, nieces, nephews, aunts, uncles, in-laws, and first cousins.

Now for the crowdfunding part. Once you have the 529 Plan set up you can invite your family, friends, and even complete strangers (if that is your wish) to contribute to your child’s 529 plan using Ugift529 is run by Ascensus College Savings, a program administrator and record-keeper for 529 college savings plans across the country. The service is free to use for the account owner and the gift giver. Think of Ugift529 like a baby registry. Personally, I have yet to use the service myself but it does look relatively easy. They have a four-step process for making the actual gift, either by electronic funds transfer or check: 

  1. Visit
  2. Enter the Ugift code: ________.
  3. Enter your name and the amount of your gift.
  4. Make your gift via electronic funds transfer or check.

Make your gift via electronic funds transfer or check. Basically, Ugift529 creates a unique code that is assigned to the 529 Plan. This same code can be embedded in printed and online invitations and on social media sites like Twitter and Facebook. Example: “What does a [enter age]-year-old really want? A college education. Visit and enter [child’s name’s] code [Ugift code]!

I can’t promise that 438 strangers will make all your education dreams come true but a code, a 529 account, and a dream will definitely help!

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