Shopping for the perfect gifts this holiday season? Contributing to 529 college-savings accounts—through gift cards, gift certificates or electronically—is a great option. Advisors are also starting to give these gifts to clients and potential clients.
Gift registries, program managers for 529 plans and asset managers (including Fidelity Investments, OppenheimerFunds and Franklin Templeton Investments) have begun to implement tools that make it easier for parents to request, receive and monitor contributions to their children’s 529 plans. In many cases, gift givers no longer need to know the account information.
Gift of College.com, a college savings registry, and College Savings Bank, a division of NexBank, have already linked their platforms to social media.
The more than 1,000 members of Gift of College.com can opt to share a link to the registry on their Facebook and Twitter pages. Friends and families press a gift button that takes them to the registry’s secure site. “It’s as easy as using an Amazon.com shopping cart,” says Wayne Weber, founder and CEO of Gift of College.com. The registry also sells gift cards online and has commitments to introduce them through retailer Target and digital gift-card platform Gyft.
Since launching its website in 2013, Gift of College.com has received more than $500,000 in gifts for approximately 370 recipients, says Weber. Roughly 97 percent of gifts have gone to 529 plans, he says, though the registry can be used to help pay off student loans.
College Savings Bank, a program manager for college savings plans in Indiana and Arizona, launched its social online gifting features in 2014. Account owners can click a button to post on their Facebook pages a personalized banner ad about their child’s 529 account. Family and friends who click on the banner are automatically directed to a secure landing page where they can make a gift to the specific account.
“I wanted the process to be as simple as possible,” says Regina Carmon, the director of marketing for College Savings Bank, who worked with IT developers to create this feature. Although the more formal e-mail feature still leads the way, she says, “I expect the social gifting component to catch on and increase,” she says. “Other program managers in the industry think it’s a really cool idea.”
Aggregate dollars gifted through College Savings Bank doubled between January 2014 and October 19, 2015. The average deposit was $825 from all gift givers, $722 from grandparents and great grandparents. Approximately half of all gifts have been designated as a “gift of education” and the balance is pretty equally split between the categories of Christmas/holiday and birthday, says Carmon.
According to a recent survey by the nonprofit College Savings Foundation, 49 percent of parents said 529 gift cards or gift certificates (both general or for a specific plan) would make college savings easier, 28 percent said they’d opt for online gifting tools, and 15 percent said they’d opt for a 529 gift registry.
“Gifting is a trend that’s on the upswing and here to stay, that’s for sure,” says Mary Morris, the chair of the College Savings Foundation and the CEO of the Virginia529 College Savings Plan.
More families, especially people in their 20s and 30s, are getting comfortable with asking friends and family to consider contributing to their children’s education instead of giving them more “stuff,” she says.
Across the industry, companies involved in 529 plans are eager to improve their gifting tools. When third-party gifting sites such as Gift of College.com and GiftedPath started working with 529 plans, says Morris, “all of a sudden a light bulb went on.” She thinks everyone will move towards social media functionality. “To me, that’s sort of the gold standard,” she says.
Winnie Sun, co-founder and managing director of Irvine, Calif.-based Sun Group Wealth Partners, has given 529 gift cards from Gift of College.com to clients on the anniversary of the day they established 529 plans and on their children’s birthdays. “People love receiving the cards,” she says.
She has also given them to employers for whom she has helped set up corporate 529 plans. Whether they use them for their own children or pass them on to employees, it sends a message about the rewards of planning, she says. “It’s not a box of chocolates.”
Morris adds, “What greater gift is there than the gift of education?”