CollegeBacker offers an easy way to start saving for college. With this service, you can make a 529 college savings plan and share a link to family and friends so they can help contribute. Read our CollegBacker review to see why saving for college has never been easier.
CollegeBacker Review: Overview
CollegeBacker is a robo-advisor for a 529 savings plan. What makes it unique is that friends and family can help you save for college by contributing via a link you give them. The platform makes it easy to start saving for college in a way that is accessible for everyone.
The platform offers some great features. Not only can contributions be made with a debit or credit card, but you can also receive cashback rewards. Read on to see what all CollegeBacker has to offer!
CollegeBacker Review: What Is CollegeBacker?
CollegeBacker is actually owned by Principly, Inc. The company is a Registered Investment Adviser. They aim to make college affordable for all American families, especially low-income families. Principly was founded in 2016 and is based in San Francisco, California.
The platform manages a 529 account with one difference from some other 529 plans out there. They make it very easy for others to contribute to paying for your child’s college. Using CollegBacker can help you stay on track when saving for college.
Any school that is eligible for financial aid in the U.S. will accept a CollegeBacker account as a way to pay for your child’s college. Education expenses can pile up quickly, so using a service like CollegeBacker can help you keep student loan debt to a minimum.
CollegeBacker Review: What’s Included with CollegeBacker?
There are some great features included when you use CollegeBacker to fund your child’s education.
The service includes:
- 529 Plan
- Cashback Rewards
CollegeBacker can help you set up a 529 plan if you don’t already have one for your child. This can be done in minutes.
What is a 529 Plan?
If you aren’t familiar with a 529 Plan, it’s necessary that you understand the basics.
- It is offered by states
- A 529 Plan is an account that allows you to save money for one person to contribute to the costs of higher education.
- The plan isn’t limited to children. You can save money for anyone with one of these plans. You can even save money for yourself.
A 529 plan is similar to a Roth IRA but is instead used for education. The plan offers tax-free withdrawals when used for educational expenses.
The tax benefits for a 529 plan are at the federal level. However, some states also allow for tax-advantaged savings when you use a 529 plan to fund your child’s college. Even if you live in a state that does not allow for tax benefits, you can still set up an account.
Opening an Account
When you open an account, you will be able to start saving for your child to go to college. You may be eligible for certain tax deductions if you live in a state where they are allowed. Alaska, California, Delaware, Florida, Hawaii, Kentucky, Nevada, New Jersey, North Carolina, South Dakota, Tennessee, Texas, Washington, and Wyoming are the only states that do not offer additional tax benefits.
Opening an account with CollegeBacker takes just minutes. You can also link any existing 529 plan to the platform.
Why Do I Need a 529 College Savings Plan?
A 529, or college savings plan, is necessary if you want to fund higher education for your child. When it comes to personal finance, setting up a 529 college savings plan can take a lot of the stress away when it comes to paying for college.
If you already gave a 529 plan, you can easily link it to CollegeBacker to reap the benefits of the platform’s 529 savings account.
One major feature is that you can make contributions that are free from gift tax. Family and friends can contribute to the 529 plan as well. Using a link that is given to you once you open an account friends and family can contribute to your 529 plan easily. This is what makes CollegeBacker different than most 529 accounts.
How Can Contributions be Made?
A credit or debit card can be used to pay into the account. You can make either one-time or recurring contributions. In this sense, CollegeBacker makes it easy to save more for college.
The fact that almost anyone can contribute to your account is what makes the platform so special. With other 529 plans, this is not always the case. It is not as easy to make contributions with most plans. The link provided when you set up an account is a major plus when it comes to the features offered by CollegeBacker.
Contribution Minimums and Limits
While there are no contribution minimums, there are contribution limits. This is currently $15,000 per child account per income tax year. This means that one person can contribute up to $15,000 tax-free to fund a child’s education.
One other excellent feature of CollegeBacker is what is called Backer Bucks. Back Bucks is allows you to get rewards in the form of cashback. These can then be deposited into your 529 plan when shopping online via the Backer Bucks portal.
Once you open an account, you will be able to take advantage of the Backer Bucks immediately.
This is a special and significant feature since most 529 savings plans do not offer cashback. The fact that you can further fund a 529 plan simply by shopping is a major bonus. in this respect, CollegeBacker is one of a kind.
CollegeBacker Review: How Does CollegeBacker Work?
CollegeBacker does not actually hold your 529 plan funds. They instead use a broker to custody funds in a 529 account. The platform simply aims to:
- Simplify opening a 529 plan
- Advice on low-cost funds for 529 plans
- Reduce the risk of investment as the beneficiary of the account ages
Using CollegeBacker allows parents or guardians to make an investment for their child’s higher education. The investment is usually tax-advantaged, as withdrawals are tax-free as long as they are used for educational expenses.
If a child decides not to go to college after you open a 529 account, you can easily change the beneficiary to fund another child’s education.
There is also no minimum balance required, making CollegeBacker a good option for those who are just getting started saving for education for their child or children. It does not matter how much money you initially deposit into the account. You can deposit a minimum amount and keep your investment growing over the years.
How Is a CollegeBacker 529 Different from a Traditional 529 Plan?
As mentioned, a CollegeBacker 529 is different than a traditional 529 savings account in that the platform makes contributing to the savings plan easier. What also sets it apart from other savings plans is that it offers cash-back incentives. These can also count as contributions to the account.
CollegeBacker Review: Is CollegeBacker Legit?
The answer to this question is yes. It is completely legit. It offers a good tax-advantaged way of sorting out your personal finance when it comes to 529 plans. The CollegeBacker 529 plan is a great way to collect funds to pay for higher education for your child.
The fact that you can also make contributions makes it easy to save for higher education. Any family can benefit from using CollegeBacker to save up for college.
Is CollegeBacker Safe?
Yes, it is completely safe to use. Once you open a 529 account, your money is completely safe as it is not held by CollegeBacker itself. This means if something happened to CollegeBacker, your money in your 529 accounts would still be completely safe.
The service also uses bank-level encryption, so your information is not at risk. You can use the platform without having to worry that your personal details will be available to others.
CollegeBacker Cancellation Policy
CollegeBacker states that you can discontinue service by emailing firstname.lastname@example.org with 30 days advance notice. If you stop using the service, you will still keep your 529 plan, however, you will lose the ability to manage or access your 529 accounts via the CollegeBacker platform.
How Much Does CollegeBacker Cost?
CollegeBacker charges just $1 per month per family. The per-month fees are very low compared to other services on the market. You can actually save a good amount of money by using the service to fund education for your child.
CollegeBacker Review: Pros and Cons
It seems that the pros well outweigh the cons when it comes to starting an account with CollegeBacker.
There are many pros that come with setting up an account. They are:
- Easy to set up a 529 plan
- Easy to contribute to
- Cashback options
- Allows you to connect already existing 529 plans from any state
- Easy to change the beneficiary
- Your funds stay in your 529 savings plan even if you cancel your subscription.
- Your money is safe
There are not too many cons associated with the platform. The main ones are:
- Monthly fees of $1
- Cancellation can take up to 30 days
- 529 plans don’t guarantee returns
Is CollegeBacker Right for Me?
If you have a child that plans to go to college, using CollegeBacker may be one way to save money for college. Even if you already have a 529 plan, CollegeBacker may be a good way to start investing for college. The fact that it has low fees and offers an easy way for family and friends to contribute make it a good option for college savings.
If you want to save more money for college, the platform may be a good way to go. After all, the low fees make it well worth what the service offers.
CollegeBacker claims that its 529 plan should produce a much higher rate of return versus keeping your money in a savings account. This is just an added bonus.
If you shop online, using the Backer Bucks can also be a serious advantage. There are not many platforms out there that offer cash back incentives on a 529 plan.
CollegeBacker Reviews by Members
Reviews from members seem to be fairly positive. With that said, however, there is a shortage of online reviews. The only ones found are simply rated by a star rating and not given an actual written review.
Perhaps there are not too many online reviews by users since the platform has not been around for too long. In our opinion, people are more likely to leave a bad review if something is wrong with a service. The fact that there are no bad reviews when conducting an online search is a good thing. This points to the fact that consumers are generally likely at least satisfied with the service.
There is no Better Business Bureau listing for CollegeBacker either. This means that there have been no major complaints about the platform to the BBB. For those interested in the service, this is a good sign.
Final Review: Is CollegeBacker Worth It?
The bottom line is that CollegeBacker is a great and low-cost way to start saving for college. The low fees, safety, cashback feature, and ability to make contributions all make it a good investment when it comes time to save for college. Any family can benefit from using a CollegeBacker account to save for higher education and prepare for a better future for their children.