If you’re a parent of young children, stop for a moment and think about the steps you have taken in the last year to help finance your kid’s college education. Maybe you just spent these seconds congratulating yourself on the latest contribution to the college fund or silently thanked kindly relatives who donated savings bonds as birthday gifts. But if you’re like most parents, not only have you not started to save, even thinking about it fills you with enough fear to totally paralyze you.
The bad news is that the paralysis can’t go on forever without disastrous results. Children grow up, they graduate high school, they focus their eyes on a dream school and parents will likely have to pay for at least part of that. However, the good news is that there is now a new tool out there to help parents get themselves on a path to financial certainty today.
Marcos Cordero is quite familiar with how enormous a task saving for college could be. Speaking to Forbes Magazine’s Meghan Casserly, he notes that at the rate college tuition is growing, saving enough to send your kid to college in 18 years can seem like an enormous hurdle. The key to overcoming it, according to Cordero, is to start small.
Cordero plans to make saving for college simpler—and more importantly less scary—through a combination of education and online tools that accept one-time gifts and recurring payments from friends and family members to help chip away at costs—and collect interest over time. After choosing a state-sponsored 529 savings plan, family members can create a profile connected with the account that creates a unique link. Cordero believes that link, when included on birth announcements, baptism invites and birthday cards can, over time, be the difference between mounting student loans and a debt-free education.
The service, called Gradsave, is free, which Cordero hopes will fuel its growth. Providing tools to allow friends and family to donate to a child’s college fund isn’t a new idea. Sallie Mae alone offers two: Ugift and FiPath. However, what sets Gradsave apart is that it requires very little information from its customers to work. Since each family (or each child) gets their own unique web address that they can simply share with those interested in donating, there’s no big company holding personal information. Cordero believes that there are enough parents desirous of privacy to support a whole new approach to the college savings business.
Crowdfunding has become commonplace these days—my Facebook FB +0.34%streams with requests for help with studio albums, charity marathons and startups—but third-party savings sites like Gradsave believe that the process is particularly in tune with the “it takes a village” mindset of raising kids. The financial reality of college savings is a dark one—and contributing directly to a child’s 529 (for anyone other than a parent) can be frustratingly complex. Can Cordero convert aunts, uncles and godparents into givers of bank account information rather than stuffed animals, Legos and American Girl Dolls?