Backer Maps Paths to $15,000+ in College Savings with Small Monthly Contributions for a New Generation of College-Bound Americans

The community-savings platform is expanding access to tax-free 529 accounts so that any American family can get ahead of the cost of college

SAN FRANCISCO, April 20, 2022 /PRNewswire/ -- The federal government just announced that it will extend its student loan moratorium until August 31. This extension underscores the financial reality that too many Americans can't make or save enough to pay for their own college debt, let alone start putting away money for their kids' education.

529s have existed as a powerful educational savings tool for decades, but less than half of Americans understand what they are or how to use them – and the ones who do tend to be more affluent and less diverse.

That's why today, Backer, the platform democratizing access to 529 plans, has published its 2022 Savings Scenarios. The scenarios highlight the many ways modern American families can save $15,000+ by teaming up and utilizing a 529, without anyone having to contribute more than $10 per month.

"The student debt crisis has ballooned beyond numbers most people can even make sense of," said Jordan Lee, Backer founder and CEO. "We wanted to share concrete examples of how American families can help their children avoid the next student debt crisis by using Backer's social savings platform. College can be within reach for every American child, no matter where they come from or their family's means."

Backer simplifies the mechanics of saving for college, helping parents take advantage of a tax-free 529 account. Parents can then amplify the power of their 529 by inviting friends, family, and their extended network to support their child's college dreams with one-time or recurring gifts. The company grew to serve more than 100,000 parents and children over the last year, helping the next generation avoid over $500 million in student debt.

Sample Savings Scenarios

Anyone can rally a community to help a child prepare financially for college. By getting support from relatives, friends, and others, Backer families end up saving 4x more than if they had been saving alone. Backer has also observed that investing together is highly motivating. Parents using Backer are more likely to contribute – and to contribute higher amounts – when they're not doing it alone. They're also less likely to abandon the effort when teamwork is in play.

Below are several scenarios illustrating how people can band together to ensure the children they love make it to and through college without mountains of debt (each assuming 10% annual growth).

• A Team of Aunties: 15 million US households are run by single mothers. Especially when faced with the gender pay gap, a single mom may think saving for her kid's education is near impossible. But imagine if she, her younger sister, her fabulous godmother, and her favorite aunt combined forces. Suddenly, college for her kid is within reach.
• Savings scenario: With a combined monthly contribution of $36 from the kid's mom and 3 backers, this kid could have $19,700 saved by the time they're 18.

• A Displaced Community: The impacts of COVID-19 have been devastating for migrants and displaced families. Many immigrants have experienced a loss of livelihood, rising xenophobia, and curtailed access to services. With Backer, communities looking to support the next generation's American Dream can band together to defray education costs. A Backer team led by a kid's father, with support from a cousin, a few members of their church, a teacher, and a friend or neighbor, can make a little from each go a long way for the kid.
• Savings scenario: With a combined monthly contribution of $47 from the kid's dad and 5 backers, this kid could have $25,700 saved by the time they're 18.

• The Independent Child: 36% of parents are not planning to save for their kid's education, which means some kids will need to take financing college into their own hands. With Backer, a kid can take the initiative by asking someone in their community to set up a Backer account for them. A soccer coach, boss, uncle, and mentors can all team up to support the kid's educational aspirations.
• Savings scenario: Beginning at age 14, a combined monthly contribution of $60 from 6 backers and $2,000 in savings from summer jobs each year could help this kid save $15,500 by the time they're 18.

• An Incarcerated Parent: 2.7 million American children have a parent in prison. The arrest and removal of a parent from a kid's life has severe emotional, social, and economic ramifications. A mom, an older brother, and a family friend can help fill the gap in lost income and still support the kid's future.
• Savings scenario: With a combined monthly contribution of $28 from the kid's mom and 2 backers, this kid could have $15,300 saved by the time they're 18.

• A Blended Family: In 2022, the "nuclear family" is no longer the dominant household structure. 37% of all marriages in the US end in divorce and roughly one in two children will see their parents' marriage break up. Separated or blended families – like a divorced father, his partner, and two grandparents – can rally to support a kid's college dreams.
• Savings scenario: With a combined monthly contribution of $40 from the kid's dad and 3 backers, this kid could have $21,900 saved by the time they're 18.

"Our goal with this exercise is to show how small contributions can add up and compound into significant college savings," said Lee. "And imagine how much faster your savings will grow if you receive gifts into your child's college fund for birthdays, holidays, graduations, and other milestones, or contribute your tax refund every year."

About Backer
Backer is the 529 platform creating a new era of community-saving for the next generation's education. It makes saving for college simple, helping modern families not only tap into tax-free accounts but also invite family, friends, and extended networks to support their kids' dreams of a bright, unburdened future. Backer is headquartered in San Francisco, CA. Visit backer.com or follow us on Twitter (@backer529) for more information.

About 529 Plans
A 529 plan is a tax-advantaged savings plan designed to encourage families to save for future education-related expenses.

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