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College itself is already a tough place for individuals to earn a degree, but do you know what’s harder than that?
Paying for College fees!
Getting a proper college education will cost parents a lot because all those books, tuition, transportation, dorm, and other fees can be very expensive unless you are offered a scholarship.
Some students are even forced to apply for student loans just to get through college especially if their parents can’t afford to send them to universities.
Forget about student loans and start saving with CollegeBacker and avail their amazing services that will help make a college education more affordable for you and your loved ones.
In this article, we will be giving you an in-depth review of CollegeBacker and why it is a good idea to invest in a tax-free investment platform as early as possible.
What is CollegeBacker?
CollegeBacker is a company based in San Francisco, California that offers the best and easiest way to start a college fund.
The primary goal of the CollegeBacker is to make saving for college easier in the United States since 2015.
The company values universality which makes it easier for most families including the wealthy ones to start saving for the child’s future.
Plus, they also use one percent of their client’s fee to help low-income families because they believe that everyone deserves to get a college fund.
How does CollegeBacker work?
CollegeBacker is an internet-based adviser that provides services exclusively through its website and mobile apps.
The main role of CollegeBacker is to simplify the process of getting a 529 plan and give the best bits of advice on low-cost funds while reducing risk as the beneficiary reaches college enrollment age.
The company will also let you use their website’s savings calculator that automatically tells you an estimated amount on how much you can save with CollegeBacker’s tax-free services.
What is the 529 plan all about?
529 Savings Plan is a state-sponsored investment account that you can use to save up for your child’s education.
The money that you put into your account will be invested and it will keep growing as time goes by.
You can also withdraw your funds if you need to pay for eligible education expenses.
If you don’t have a 529 plan yet, CollegeBacker will help you set up the best plan for your child just by using their website.
Payment is also hassle-free since you can pay your contributions using your credit card, debit card, or bank transfer.
There is also no minimum account size or investment amount to be part of the 529 plan.
What if I already have an existing 529 plan?
According to their website, you can easily connect your existing account to CollegeBacker and get access to the same features of the platform such as:
- Easy access to your account information through the mobile app and website
- Collect gifts from family and friends
- Earn cash back rewards through their Backer Bucks program; and
- Set up contributions to your account
Connect your existing 529 plan account by signing up here and clicking “Link My Plan”.
What if my child receives a scholarship in college?
Luckily, you can still use the 529 plan to pay for other college-related expenses such as dorm fees, books, etc.
But if the scholarship covers all the expenses, you can transfer it to another beneficiary account or you can also withdraw the money for a different purpose.
There will also be a 10% penalty and tax is also applicable if you use it for something else that is against the terms and conditions.
How much money can you put in a 529 plan per year?
Contributions to a 529 plan are usually considered as gifts for gift-tax purposes.
IRS didn’t specify this year’s annual 529 contribution limits, which means that you don’t have to worry about putting more into your 529 account.
However, terms and conditions still apply for making a large deposit this year. So you need to be extra careful.
What happens to my 529 plan if my child decided not to go to college?
You won’t be losing your savings since the funds from the 529 plan can still be utilized if your beneficiary doesn’t wish to pursue higher education.
However, you can still…
- Send another family member to college.
- Use the fund to go back to college yourself.
- Leave the money for future use in case they finally decided to go to college.
- Withdraw the funds with possible penalties.
Is it better for a parent or grandparent to own a 529 plan?
Parents are the main owners of the plan and it is not considered as the student’s income, but rather a savings fund that is set aside for college education.
Due to this distinction, 529 plans owned by grandparents may reduce the amount of financing that a child may receive for their college fund.
We highly recommend having the parents be the owners of the 529 plan so that their beneficiaries can get the most out of it.
Can a grandparent contribute to a 529 plan and claim a tax deduction?
529 plans can accept third-party contributions, which means that grandparents can also contribute to their grandchild’s account.
The five-year gift tax averaging allows you to add contributions to a 529 plan by not reaching the $15, 000 annual gift exclusion.
Grandparents may also claim a tax deduction for their contribution if they live in one of the 34 eligible states that offer a state income tax deduction, while the other remaining states will only allow you to deduct contributions if you are the main owner.
What is the difference between CollegeBacker and a 529 plan?
CollegeBacker is simply an investment adviser that will give you recommendations on how to save and make college affordable.
The platform invests your college savings in a 529 plan that computes the right plan for your family.
It also gives you quick access to your 529 account through their mobile app and website, and they also help you make withdrawals once your child is finally ready to go to college.
On the other hand, a 529 plan is where your contributions are being invested by national investment companies that will grow until your child enrolls in college.
CollegeBreaker serves as your investment adviser while helping you manage your 529 plan
When should I get started with CollegeBacker?
Although there is no specific time to start saving for college, we highly recommend you to get started as soon as possible.
Since the money on your savings fund will be invested, it will keep on growing until your child finally starts to go to college.
If you don’t think setting up for CollegeBacker is not yet essential, you might regret it later as time goes by.
Don’t miss this opportunity!
How to get started with CollegeBacker?
You can easily join CollegeBacker by simply signing up using your email to set up a college fund on their website in 2 minutes. Pretty cool, right?
Does CollegeBreaker have fees?
CollegeBreaker has a very affordable fee that’s only $1 a month that the whole family can use.
Is CollegeBacker legit?
CollegeBacker is very legit and is SEC-registered so you wouldn’t have to worry about your college expenses in the future.
Is CollegeBacker worth it?
Even though CollegeBacker has a monthly fee, it is very worth it because their platform gives you quick access to your funds that you can easily monitor.
Plus, you can also receive gifts from your loved ones through CollegeBreaker.
Is CollegeBacker safe?
CollegeBacker is very safe because they don’t hold your funds and your contributions go to a state-sponsored account that is exclusively managed by national investment companies.
What are the Pros and Cons of CollegeBacker?
- A stress-free sign-up process that takes less than 5 minutes.
- They do not require a minimum account size or investment amount to become a client.
- Gives you easy access to your account through their website and mobile app.
- Lets you receive gifts from family and friends.
- Has a cashback rewards program through their brand-name partners that will help you save more.
- Has service fees per family – but it isn’t that much of an issue because the perks of the website are worth it.
Are there other companies similar to CollegeBacker?
UNest is also quite similar to CollegeBacker since it is also an app where families can invest in a UTMA account.
Their app also allows its users to view their monthly contributions for $3 a month, which is more expensive than CollegeBacker.
But since CollegeBacker is a developer of the best money-saving platform, it is still considered the best choice, due to its cheaper financial services that you can easily access on their website or mobile app.