The Ultimate Guide to Backer for College Savings

What is Backer and How Can It Help You Save for College?

Backer is an online platform created in 2016 that allows families and friends to collectively contribute to tax-advantaged 529 college savings accounts. The founder, Jordan Lee, realized the enormous potential of 529 plans for education savings but wanted to improve the cumbersome process of setting up and managing accounts.

With Backer, you can easily create a 529 account tailored to your savings goals. The platform makes it simple for grandparents, relatives and family friends to contribute any amount, starting at just $5. Over 500,000 families have already saved more than $500 million in potential student debt through Backer.

How Do 529 Accounts Work?

529 plans are investment accounts designed specifically for education costs. They come with unrivaled tax perks:

• Earnings grow federal tax-free if used for qualified education expenses
• Many states offer tax deductions for contributions
• Accounts avoid probate and estate taxes

Additionally, 529s have high contribution limits, and anyone can open one for a beneficiary. This makes them a go-to education savings vehicle.

Backer guides users towards low-cost 529 options with strong investment performance. The funds inside the account remain yours while Backer handles setting up and managing the account.

What Are the Benefits of Using Backer?

I‘ve used Backer for over two years and counted the following as the biggest benefits:

Easy Account Opening

It only took around 5 minutes to set up my son‘s 529. Backer walks you through every step, including verifying your identity and funding the account.

Powerful Savings Calculator

Backer‘s calculator shows your potential savings based on monthly contributions, matches and your child‘s age. It was eye-opening to see the future balance grow into six figures.

Simple Contribution Tracking

You can instantly see who has donated to your child‘s account. I like sending reminders when a birthday or holiday comes up!

Investment Guidance

I leaned on Backer‘s experts to select low-fee index funds tuned to my risk tolerance and years until enrollment. Takes the guesswork out!

Tax-Advantaged Savings

Watching the account value accelerate thanks to tax-free growth inspires me to keep contributing. In 18 years, my son will have a nice head start!

How Much Does Backer Cost?

Backer charges a reasonable monthly platform fee but does not take a percentage of assets like most traditional 529 plans.

Here is the fee breakdown:

• Backer One Child: $2.99 per month
• Backer Multiple Children: $5.99 per month (up to 5 kids)
• Backer Tax-Advantaged Plan: 0.15% annually in underlying fund fees

There are no hidden costs or account minimums. Considering a typical 529 charges over 1% annually, Backer offers great value.

What Backer Customers Are Saying

Backer earns consistently positive feedback across online reviews. On Trustpilot, happy parents highlight the "easy", "helpful" platform with a 4 out of 5 star average.

Many note they specifically appreciate…

• The collaborative, communal nature of savings contributions
• High tax-advantages compared to other investment accounts
• Intuitive mobile app and seamless user experience

As one mother wrote: "I‘ve finally found an easy way to start saving for my daughter‘s future. Family and friends love being able to contribute small amounts that add up over time. I‘d absolutely recommend Backer to any parent!"

How Does Backer Compare to Other College Savings Options?

I researched popular alternatives to weigh how Backer stacks up:

Custodial Accounts

While simple to open, custodial accounts offer zero tax benefits until the child withdraws funds. Plus, balances over $2,100 impact financial aid eligibility.

Prepaid Tuition Plans

These lock in today‘s tuition rates but have strict usage rules. If your child attends a different university, you lose money recouping the balance.

Traditional 529 Plans

Big investment selection but high underlying fund fees that erode savings over decades. Most have high minimums and limited contribution tracking.

Backer combines the best aspects of all plans: tax-free growth, discounted asset fees, easy signup, no investment minimums and seamless contributor coordination.

5 Tips to Maximize Your College Savings

As both a Backer user and financial advisor, I recommend the following tips:

1. Start with any amount you can afford, even if it‘s small
2. Set monthly recurring contributions for "auto-pilot"
3. Research 529 tax breaks in your state
4. Use Upromise to earn college savings rewards
5. Invite family/friends to contribute with gift-giving reminders

Is Backer Right for My Family?

Backer offers a versatile solution for nearly any household looking to save for future college costs. Grandparents love coordinating relatives to build funds for grandchildren. New parents appreciate the tax advantages and project headstarts.

Even lower income families can benefit – Backer has no minimums, and micro-contributions empower anyone to gradually build sums that grow over 18+ years.

The Bottom Line

After thoroughly evaluating Backer‘s pricing, features, reviews and alternatives, I can confidently recommend it to parents, grandparents and relatives alike. The intuitive platform makes tapping into 529 benefits wonderfully straightforward.

By collecting contributions across generations, Backer empowers families to come together and realize major college savings milestones. Opening my son‘s account was one of the best financial decisions I‘ve made for his future.