How to Crowdfund a College Education

Photo by Tyler Olson / Shutterstock.com

Struggling to pay for college? Perhaps crowdfunding can ride to the rescue.

Even if you’re unsure what the word “crowdfunding” means, you’ve likely been exposed to the concept. With crowdfunding, someone solicits money from the public to pay for something — such as developing an invention, like a suitcase that doubles as an airport scooter, or to help cover the costs of exorbitant medical treatments.

These campaigns usually happen on what’s known as a crowdfunding website. Examples include Kickstarter and Indiegogo, as we recently explained in “20 Unusual Ways to Earn Extra Cash.”

Now, you can also crowdfund a college education.

The Associated Press reports that more 529 plans are adding crowdfunding-like tools, enabling more college-bound students and their parents to ask friends and relatives to contribute money for the students’ college studies. For example, the AP continues:

“Some parents have asked for cash contributions as birthday gifts instead of toys. Others have used them to boost the savings of a child who lost a parent.”

When someone contributes to another person’s 529 plan, the money is transferred directly from the giver’s checking account to the recipient’s 529 account. There is no fee for this.

Mary Morris, CEO of the Virginia529 College Savings Plan, tells the AP that givers prefer contributing electronically rather than mailing checks.

Virginia529 launched a crowdfunding platform in May. In the first three weeks after the launch, about 1,200 accounts received contributions — with an average of $900.

What exactly is a 529 plan?

This is great news — particularly in an age of ever-mounting student debt — because a 529 plan is already a great way to save for college. As Money Talks News founder Stacy Johnson recently explained in “Ask Stacy — What’s the Best Way to Save for My Kid’s College?“:

“When saving for college, 529 plans are a great way to do it for the same reason your 401(k) plan is a great way to save for retirement. Namely, the savings on your income tax. Like a qualified retirement plan, earnings in these plans grow federally tax-free.”

Just be wary of running afoul of the IRS when using a 529 plan.

There are two types of 529 plans: prepaid tuition plans and college savings plans. For a detailed description of the difference between the two, check out Stacy’s story.

According to federal data, every state (and the District of Columbia) offers at least one type of 529 plan. Some educational institutions, like certain private colleges, also sponsor prepaid tuition plans.

Is a 529 plan right for you?

A 529 plan is one of several ways to save for college. So as great as it is, it might not be the best option for you or a college-bound loved one.

Other options include Coverdell education savings accounts and even Roth individual retirement accounts, or Roth IRAs.

To learn more about the pros and cons of 529s, check out “Everything You Don’t Know About 529 College Savings Plans.”

How do you feel about the notion of crowdfunding a college degree? Sound off below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
13 Small Gadgets Under $20 That Make Life Better
13 Small Gadgets Under $20 That Make Life Better

These inexpensive electronics will make your day-to-day life a little easier — and happier.

7 Surprising Ways Retirees Waste Their Savings
7 Surprising Ways Retirees Waste Their Savings

You can make your retirement money last a lot longer by avoiding these costly mistakes

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 U.S. Jobs That Are Disappearing Fastest
10 U.S. Jobs That Are Disappearing Fastest

Think twice before pursuing these shrinking occupations.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

This Simple Mistake Might Weaken Your COVID-19 Vaccination
This Simple Mistake Might Weaken Your COVID-19 Vaccination

Avoid doing this before you get vaccinated.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

11 Products Now in Short Supply Due to the Pandemic
11 Products Now in Short Supply Due to the Pandemic

Many goods we take for granted have become tough to find in 2021.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

9 Things You Should Never Leave in a Car
9 Things You Should Never Leave in a Car

Thinking of leaving these possessions in a car? Prepare for unexpected consequences.

9 Mistakes People Make When Cleaning With Vinegar
9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

10 Things Successful Retirees Do Differently
10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.