‘Gift of College’ Review: A Gift Platform for Student Loans and 529 Plans
Looking for help to pay for college? Friends and family can pitch in for your school costs through the Gift of College platform.
This popular crowdfunding service allows students to apply gift money directly to their 529 plan or student loan. Check out our Gift of College review below to learn the basics and decide if it’s a good tool for you.
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How Gift of College works
Contributing to a friend or family member’s student loan or 529 college savings plan can be a bit tricky. You might need the recipient’s account details and personal information — or else you’d have to send a check to the giftee, hoping the money gets applied toward its intended purpose.
Gift of College bypasses this whole process with a streamlined service, making sending a financial gift for college relatively quick and easy. The funds can be applied toward a student’s current or future tuition, books and fees or living expenses.
Receiving funds
Students or their parents can follow these steps to get started:
- Create a free profile at GiftofCollege.com.
- Link your student loan or 529 plan to your account. (Here are some 529 plan options if you don’t already have one.)
- Share your unique URL with family and friends so they can purchase student loan and 529 gift cards. Birthdays, holidays and graduation could be good times to share this information, for example.
- Redeem your gift cards by clicking “Redeem gift card” on your member profile page, then entering each card’s code. The full value can be applied to most 529 and student loan accounts. Just note that it can take up to two weeks for the funds to be credited to your account.
One cool perk of Gift of College is its gift-card exchange. That’s right: You can dust off other merchants’ gift cards and see if the funds can be applied to your Gift of College account. This “CardCash” service may not offer a dollar-to-dollar exchange, but it still could be worth checking out.
Sending funds
Family, friends, employers and yourself (as the student) can make contributions to a Gift of College account by purchasing gift cards in various denominations.
Here are your options:
- In store: Over 3,000 retail stores sell Gift of College gift cards, such as Save Mart, Cumberland Farms, Fred’s, Lucky Supermarkets, FoodMaxx and more. To find a store near you that might offer cards, use the “Store Locator” on Gift of College’s website.
- Online: You can purchase digital cards ranging from $25 to $200 directly from the Gift of College site. Walmart.com also sells $100 gift cards in both digital and physical form. However, note that convenience and delivery fees may apply, and caution is important when purchasing gift cards online.
- Digital delivery schedule: You can enter any future date for an e-card to be sent to the recipient on the Gift of College site. This is helpful if you want to send cards for a special upcoming occasion.
No longer need your Gift of College gift cards? The good news is that they never expire — you can hold onto them for the future or re-gift any unredeemed cards to another student in need.
However, Gift of College gift cards are nonrefundable. Furthermore, if you’ve already applied the gift cards to your account, you have to use them for the linked student loan or 529 plan — you can’t transfer them to another account.
Gift of College fees
The Gift of College is a for-profit organization which adds service fees to keep their platform up and running. Notably, these fees only apply to the purchaser, not the recipient. Gift givers are charged a 5% service fee per transaction, which is capped at $15.
Here are the fees charged for gift cards, purchased from GiftofCollege.com:
- $25 + gift card = $3.95 fee
- $50 + gift card = $4.95 fee
- $100 + gift card = $5.95 fee
There may also be fees associated with gift cards purchases in stores, which can vary.
Where you can use Gift of College
Your Gift of College is designed to help fund your college education. The following educational plans are typically covered:
- 529 college savings plan: Your Gift of College funds can be applied to any participating 529 plan.
- 529 ABLE (529A) savings plan: Another option is the ABLE plan, an account designed to help eligible people with disabilities students save for their expenses, including pursuing education.
- Student loan: A range of student loan providers allow contributions through Gift of College.
Just keep in mind that although Gift of College strives to work with all plans and providers, there are some who choose not to participate in this program.
Make sure to check your plan’s eligibility once you create an account. If you don’t see your provider listed, reach out to the Gift of College’s customer service to see if they can be added.
Gift of College contribution limits and tax benefits
In general, you can buy as many Gift of College gift cards as you like. However, the Gift of College limits each transaction to within the range of $25 to $500.
Here are some other factors to take into consideration.
Federal gift tax
Contributions made to an individual’s student loan account or 529 plan are classified as gifts — which can incur taxes if they exceed a certain threshold set by the IRS. For example, the gift tax limit per individual for 2022 was $16,000.
So in theory, if your grandparent decides to contribute $15,999 toward your student loan, they shouldn’t have to pay any taxes on it — and nor should you.
Tax benefits
Investing in a 529 can be an excellent way to fund a child’s education, since the earnings are tax-free. In addition, certain states offer income tax deductions or credits when you make 529 contributions.
How do these tax breaks and credits work with a Gift of College contribution? Generally, if your state offers 529 contribution benefits, then the same benefits should apply to your Gift of College purchases. But since rules vary greatly by state, it’s best to reach out to a tax advisor for guidance.
Gift of College from employers
Incorporating Gift of College into your company’s benefits package could go a long way in helping employees plan for their childrens’ future. The program is easy to implement and gives your workforce full autonomy on where to apply the funds.
| Employer options for Gift of College |
|---|
| Here are two approaches to consider: ● Payroll deductions: A company can set up voluntary automated payroll deductions, which go directly to the employee’s selected 529 plan or student loan account via the Gift of College platform. Employer matching is another possible feature. ● Gift cards: Business owners can purchase Gift of College gift cards in bulk to use for rewards, special occasions or bonuses. |
How to decide if Gift of College is worth it
Using the Gift of College platform may be worth the effort if you have friends or relatives who want to donate to your college fund. It avoids the hassle of supplying personal account information and ensures the money ends up in the right place.
You can easily add your Gift of College information to party invites or share it over social media. If someone asks what you want for graduation or your birthday, you could send them the link.
Some students might also use the Gift of College to pay for their own tuition — for example, if they want to use a credit card to make a payment on their student loan. Note, however, that using credit cards to pay student debt carries financial risks — including high interest rates — so be sure to think it through before buying Gift of College cards on credit.
Gift of College probably isn’t best suited for someone wanting to contribute to a student’s plan on a regular basis, as the per-card fees can quickly add up. Plus, you won’t be able to use the gift cards if your loan servicer doesn’t participate with Gift of College.
More crowdfunding options to consider
Gift of College isn’t the only choice when it comes to crowdfunding your college education. Depending on your specific needs and future goals, you might turn to one of a variety of solutions.
Here are other sources to consider:
- GoFundMe: This popular platform allows you to run a fundraising campaign for a specified amount of money. Although GoFundMe has its pros and cons, one upside is that it allows you to share your unique story and could even generate more awareness toward student loan debt in general.
- Backer: The Backer 529 plan works similarly to Gift of College, allowing friends and family to easily make contributions via a shareable link, but it comes with a $5 monthly fee. The benefit of this plan is that others can freely contribute as often as they’d like, and you’ll receive extra support for your or your child’s 529 plan.
- UNest: This is a general investment account for kids. Unlike a 529 plan, the funds can be applied toward any future expense once your child reaches adulthood — such as purchasing a new car or making a down payment toward a house. Plans start at $2.99 a month.
If you’re looking to further maximize your savings, check out our alternatives to 529 plans and best checking accounts for college students.
Other ways to save for college
In the end, Gift of College isn’t the only solution for your student loan woes. It’s a tool, but not the whole toolbox.
It’s important to incorporate as many resources as possible to help reduce your higher education costs. This includes applying for scholarships and maybe landing a decent-paying job while in school.
After graduation, you can look into student loan refinancing for your private college debt, consider income-driven repayment for your federal college debt, and reach out to companies who help pay off student loans.
In addition, it’s a good idea to keep up-to-date on the student loan forgiveness and mass forgiveness requirements — you may be eligible to apply.
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