College savings is a topic most parents can tune into, and is the subject they are most stressed out about, said Abby Chao, co-founder and chief operating officer of CollegeBacker. The new crowdfunding 529 savings program was launched by Chao and her business partner Jordan Lee, who is CEO (and head of the investment advisor Principly Inc.) But what if there was an easy way to save and allow others to contribute?
“Almost every parent wants to save,” Chao told an audience attending the Hearsay 2018 Summit. “And parents’ No. 1 concern is paying for college, but only a fraction are saving. Most of those are using checking and savings accounts. But all of us know 529 plans are so great, especially with tax savings.”
There are many 529 programs, both state and private plans, Lee said, and a lot has to be digested before a parent can even start a 529 program. So when he and Chao started CollegeBacker in 2016, they tried to simplify the process, and added something very common and acceptable to the millennial generation: crowdfunding.
“We made it consumer grade to help them get it up and running, and supercharged it with friends and family getting involved,” Lee said. Chao added: “Millennials are comfortable to talk about financials and to put up crowdfunding links.”
In fact, a 2016 Fidelity study found that 84% of parents would welcome help for college savings accounts instead of traditional presents. And only four in 10 had asked their family members to donate.