For parents concerned about future ability to pay for their children's college educations -- which means just about all of them -- here's a new online service that works like a gift registry for college contributions from family and friends.
FreshmanFund.com lets adults register a profile for their children with links to whatever 529 college savings plans they've chosen to receive and manage set-asides for future tuition.
Anyone who wants to contribute -- in lieu of heaping toys and video games on their grandchildren, for example -- can log onto FreshmanFund.com and make contributions directly to the linked plan. The site takes care of account details and money transfers through a secure connection -- no more sending checks to parents as the middle men -- and notifies account holders of who contributed what.
FreshmanFund.com was launched in August by Jason Olim, who, in 1994, co-founded CDNOW, one of the earliest online sales operations.
Mr. Olim said there is currently no charge for FreshmanFund.com's service (profit will come from advertisers), although at some point he'll be adding a small service fee to cover the cost of credit card transactions.
The site allows contributors to "give money to someone and be confident it will end up in a college savings plan," Mr. Olim said. "It also allows parents to attach a plan and let people in their social network know they'd be happy to receive contributions to it."
The site works two ways.
"I go to Freshman fund.com, buy my niece a gift certificate and send it to her e-mail address," he said. "She can redeem it by telling the site to deposit it into her 529 plan. That's the only way the money can come out."
If the family already has a 529 account registered to the site, he said, "I can look them up and give to their plan directly, specifying it's for her birthday or some other occasion."
529 plans are educational savings instruments operated by states or schools. There is no tax on the interest that accrues, nor on the money that is withdrawn to pay for college.
State-sponsored plans can be used at any accredited college in the country and, in some cases, abroad. Parents may live in one state, invest in another state's plan and use it for college in a third state.
Many financial advisers recommend that 529 plans be held in the name of parents, not students, to simplify financial aid applications later on.
Sally Kalson can be reached at firstname.lastname@example.org or 412-263-1610.