INVESTOR COLUMN: A different way to help pay for college

July 1, 2014 

Let's face it, the cost of sending your child to college these days is expensive -- and climbing. With scholarship dollars in high demand and student loans harder to get, saving for college is a good practice to start early and often. And if you can tap into a program that can help enhance your savings program, shouldn't you take a look?

Enter UPromise. Quite simply, it's a membership program in which members, through their ordinary spending habits (directed through UPromise partners) can earn cash back which is then directed into their UPromise account to help pay for college. UPromise awards can also be directed into a 529 college savings plan.

Cash-back rewards are usually 5 percent of the amount purchased if you shop online, and can be as high as 8 percent. UPromise even offers its own credit card and, if you use that to pay for your purchases, rewards can go higher. UPromise has partner relationships with more than 850 online stores (such as Amazon and Orbitz), 10,000 restaurants and 20,000 grocery/drug stores.

How much could you potentially earn in cash rewards for your college savings account? Well, if you spend $500 a month on a credit card through UPromise partners, with an average "cash back" rate of 5 percent, that's $300 of cash rewards per year. If you spend more than that, rewards grow proportionately. You can also link the credit cards of your friends and family to your UPromise account, growing the savings even further. What a great way for grandparents to help save for their grandkids' college!

Once accumulated, cash rewards can be accessed in several ways:

1. You can request a check be sent to you right from their website.

2. If connected to a 529

plan, UPromise rewards are credited on a quarterly basis.

3. You can connect your UPromise account to Sallie Mae, if you want to use rewards to pay down a college loan.

If you still have a UPromise balance when your child graduates, you can request the balance be paid directly to you. The best part about that disbursement is that it's not taxable income to you -- it's considered a vendor rebate.

The UPromise program is free to members. Anyone can join by going to the UPromise website at http://www.upromise.com/welcome/what-is-upromise to register.

To accumulate rewards via online shopping, you need to go through the UPromise website to find your vendor. For dining establishments, you need to register your credit card(s) with UPromise for rewards to be credited. For grocery or drug stores, the UPromise site lists coupons you can select and when you use your shopper's card (registered with UPromise) for these couponed purchases, the cash rewards listed on the coupon are credited to your account.

Sound too good to be true? According to UPromise, there is no catch. Per their website, the money earned actually comes from Upromise partners, who are willing to give a percentage of your spending to help make college more affordable for millions of Americans. It's good business for them.

If you are properly motivated and start early, this program has the potential to help pay for 5-10 percent of your child's college costs at (basically) no cost to you. As a wealth adviser, I can't think of too many other education funding strategies easier than this.

Karin Grablin, CPA, is with SRQ Wealth Management, 1819 Main Street, Suite 905 in Sarasota, 941-556-9004. SRQ Wealth Management and LPL Financial are not affiliated with UPromise.

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