Two Plans for Parents for College Funding

If you haven't already decided on a vehicle for saving for your child's higher education, think about a couple of choices that have worked well for many other parents in planning funding for college. 


As always, it's best to speak to your personal financial advisor about what plan is best for your family. While I don't particularly endorse or recommend one savings plan over another, below are two possible options that have been in the news recently:

Upromise® for College

A small play on words (you promise) sets the tone for this plan, which originated in 2001. It is free to join and is based on your spending habits. Purchases you make earn as much as 25% cash back in a college fund or just a savings plan. This system works if you don't fall into a trap of buying some things just to get money back.

Some of the items that pay you back are groceries, online shopping, travel purchases, and dining out. Upromise® requires you to register credit cards, grocery cards, and debit cards along with your contact information.

While this sounds a little scary, it is necessary to be sure you get your full credit on purchases hassle-free, and the plan has been around for some time and has proven to be very reputable.

The 529 Plan

Named after Section 529 in the IRS Code, this plan is sponsored by educational institutions or individual states themselves. Every state now has at least one 529 Plan. The 529 offers flexibility in where a child goes to school because it is not state specific when the funds are withdrawn. Your child can live in one state, have a 529 in another, and go to college in a third state under most plans.

States regulate the plans they offer, so all regulations are not completely the same from one to another. A state is not limited to just one plan either, but may offer several. If the plan you choose meets the basic requirements, you have tax benefits for choosing to save in this manner.

The Difference Between Plans

The most obvious difference between the two plans is that the 529 has tax incentives, but it is also strictly a savings plan where you must take money and put it in the kitty.

Upromise® is a way to make money on the necessary and usual expenses in your life. Vendors who agree to Upromise terms do so to acquire your business, which is a good concept as long as you don't pay too much for the products or services or purchase items you don't really need.

You may find other college saving plans that suit your financial situation better or can be used in conjunction with either of these. The important thing is to find some way to put money back for this important part of your child's life, and the earlier you start the better.