KANSAS CITY, MO -- It's not just retirement funds that took a hit during this recession, so did many college savings plans. Some consumers found a way to make that money back.
Tuition is going up, and college savings plans are going down with the slumping economy. A metro family says a swipe of a credit card put $500 dollars back in their account.
Parents who followed the advice of their financial planner and began putting money into a college savings plan or 529 plan are questioning that advice as their funds have dropped during the recession. Like ever financial savings plan, there's risk. Financial experts say it's all how you manage it.
To help recoup some of those losses, people are signing up for incentive programs. "There's certain vendors who affiliate themselves with various 529 plans and for purchases that you make with that vendor you'll get a credit, kinda like your credit cards, that you score points, where your getting credit which is getting put back into your 529 plans," certified financial planner David Jackson said. "So its kinda like free money just for shopping."
Margo Aldridge singed up for
Upromise in 2005. She took advantage of the ability to link her Upromise account to a 529 college savings plan.
You have to shop at certain web sites or buy certain products at select retailers.
"Some of them are well known. Some are not as quite as well known," Aldridge said. "I'm going to go buy a box of cereal. I'm going to buy toilet paper. I'm going to buy Kleenex. Anyhow, I might as well get the manufacturers money for doing this and if that goes on and kicks into a 529 and benefits my grandchildren on down the line I might as well go and take advantage of it," Aldridge said.
Once you shop, you have two ways to get the money back. One is to link it to your Upromise account to your credit or debit card. The company says you don't have to do this if you shop at their online mall, but it's the way to track offline purchases such as at the grocery store. Or you can get a Upromise credit card. That's what Aldridge did.
The company website advertises 1-25% cash back depending on where you shop. Aldridge says her payoff averages around 1% with the Upromise credit card. "This isn't necessarily going to be a quick savings," Aldridge said. "I don't rely on the Upromise program to fund a 529. I don't do that, but there is a little incentive to have that money come into it."
One perk of the 529 plans is the fact you don't have to pay taxes on the money unless you take an early withdrawal or if the money isn't used by the time a child turns 30.
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