The holiday season is approaching, and with it, the busiest time of the year for shoppers as they search for the perfect gifts for their loved ones. But instead of purchasing the latest toy or electronic gadget for your children or grandchildren, what about giving them the gift of a more secure future? Roger Michaud, senior vice president and director of sales for Franklin Templeton’s 529 College Savings Plan, discusses how crowdfunding can help finance a college education—a gift that can keep giving for a lifetime.
Recently, I was struck by two very different articles—one about holiday gift-giving and the other about student debt. However, as I read them, I realized how intertwined they really are. Let me explain. Each holiday season, I find myself researching “best gift ideas for…” and come up with the same old lists. I even try different ways to search: “non-toy gifts,” “meaningful gifts” or “best-uncle-ever gifts.”
This year, I happened upon a study from the Journal of Infant Behavior and Development1 that found toddlers with fewer toys were more creative and focused. Even those “educational” toys?
That got me thinking about 529 plans and how they are a unique, meaningful gift that will eventually contribute to my family’s learning. I also started thinking about the rise in student debt and how helping save for education could help my nieces avoid a large amount of debt later.
Even if you don’t have children, you probably have already heard the staggering statistics about student debt in this country. As of the second quarter of 2018, there was more than $1.5 trillion in student loan debt outstanding, triple that of 2001.2 Various estimates show the average student loan is now more than $30,000 at graduation—quite an amount to face as one starts his or her career.
Many individuals still saddled with debt years after graduation are putting off events like getting married, buying a home or having children of their own because of it.
Despite this mounting debt burden, according to the College Savings Foundation’s 12th Annual State of College Savings Survey, more than half (57%) of parents surveyed plan to borrow to pay for their children’s college, with 62% of them borrowing primarily through education loans, and 18% through credit cards or a credit line cash advance.
While student loans certainly are a viable option for some families, I would like to pose another idea to help finance a college education during gift-giving season—crowdfunding. What if this holiday season, you swap just one gift for a contribution to a child’s 529 college savings plan via a crowdfunding platform?
You probably have heard about crowdfunding, which is a means to raise funds for just about any purpose—including charitable causes, entrepreneurial ventures, medical expenses or yes, even financing a college education.
Now your first reaction might be: “I would not feel comfortable asking other people to pay for my child’s education!” But when you have relatives or others in your child’s life who you know are planning to give them a gift in any case, this can become a more comfortable option. Perhaps they pair a small traditional gift with a college savings contribution.
Consider this: the College Savings Foundation survey also found that 40% of parents who responded said their children had considered not going to college at all, up from 28% last year. Why? A third of those parents said that their child didn’t want them to be paying that much money.
However, it is still the case that, overall, college graduates out-earn high school graduates over their lifetimes. Data from the US Bureau of Labor Statistics show high school graduates aged 25 and up working full time had median weekly earnings of $726, while those with a bachelor’s degree earned $1,310, and those with advanced degrees (professional or master’s degree and above) earned $1,512.5 In addition, the unemployment rates tend to be higher among those without college or advanced degrees.
“Spryng” into the Holiday Gifting Season
There’s an adage about holiday gifting for children: Give them something they want, something they need, something to wear and something to read.
While a contribution to a 529 plan may not be something a child necessarily wants today, it is something that many need. Enter Spryng, Franklin Templeton’s college savings crowdfunding solution.
In addition to being good for the kids, Spryng is a great way to help family members who, like me, struggle to find the perfect gift. “I don’t know what to get!” or “What does Molly want this year?” Over the holidays, these are common sayings. With Spryng, you have an answer.
Designed exclusively for Franklin Templeton 529 plan account owners,6 Spryng is a personal crowdfunding tool designed to help meet the increasing cost of college and certain trade schools. It takes just a few minutes to set up a Spryng account for a beneficiary and share it with friends and family.