Kids usually ask for toys or electronic devices during the holidays. But many parents have their own idea of what family and friends can give their children: donations for college tuition.

Two-thirds of parents say that a contribution to their child’s college savings fund would be the ideal gift, according to a survey by Upromise, a shopping loyalty program where rewards can be applied to a college savings plan. 

The problem is that many parents are afraid to ask. A recent Fidelity survey found that 84 percent of parents would welcome contributions to a college savings account instead of traditional presents, but only four in 10 had asked their family and friends to make a gift toward college.

Asking for money can make for an awkward conversation, says Mark Kantrowitz, publisher and vice president of strategy for Cappex.com, a website that helps students compare colleges and find scholarships.

“It can seem gauche to ask for money," Kantrowitz says. "But giving money for college can have a much longer-lasting impact.” 

Crowdfunding on Social Media

Several companies are now making it easier for parents to ask family and friends to put money into a child’s 529 savings plan, an investment account where money can grow tax-free to pay for higher-education expenses.

If you have a Fidelity 529 account, for example, you can use Fidelity’s 529 online gifting service to set up a personal page, post pictures and stories about your kids, and invite people to contribute by clicking on a link that directs money electronically to the 529.

Then you can use social media, such as Facebook or Twitter, to get the word out or include the link in printed or electronic holiday greeting cards.

In September, the startup tech company CollegeBacker, whose funders include Princeton University, launched an automated investment service dedicated to funding college tuition and related expenses.

With CollegeBacker, which describes itself as a robo adviser focused on college savings, you can open a 529 account and get a link to share with family and friends. You can then post regular updates on your kids, and contributors can set up regular contributions toward college tuition.

Note that CollegeBacker’s 529 is a managed fund and that once the account reaches $5,000, you'll have to pay a 0.5 percent annual advisory fee based on assets managed. That’s cheaper than most adviser-sold plans but more expensive than buying a 529 plan directly.

Almost every state offers at least one 529 plan, and you don’t have to be a resident to invest in one in another state.

At Morningstar and SavingForCollege.com, you can compare state 529 plan costs and benefits.

A Gift Card for College

Gift cards are perennial holiday presents, and now you can buy them for college savings accounts. In November Toys "R" Us and Babies "R" Us began offering physical gift cards for 529 plans. They partnered with GiftofCollege.com, which is an online registry for 529 accounts, and the cards can be redeemed for contributions of up to $500 to any state's 529 plan.

Recipients have to set up a profile with GiftofCollege.com to direct the money to a 529 plan. Buyers of a card pay an activation fee of $3.95 to $5.95 depending on the amount on the card, though there is no fee when redeeming it.

In addition to its college gift registry, GiftofCollege.com offers printable gift certificates that can be linked to a 529 plan or an existing student loan. Gift givers pay a processing fee of 5 percent of the value of the card, capped at $15. Leafsavings.com also offers electronic gift cards for 529 accounts and charges an activation fee of $2.95 to $11.95 depending on the amount.

In addition to the satisfaction of giving a more meaningful monetary present, 529 gift givers may also benefit. Contributions to 529s aren’t deductible on your federal taxes, but some states offer a tax deduction on contributions even if you're not the parent who set up the account. So it’s a gift that may give back to you.


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