Marcos Cordero became an entrepreneur in 2012–right around the time he became an uncle. He wanted to give a meaningful baptism gift but found nothing that could actually make an impact on his niece’s life.
“In thinking through what could be considered ‘meaningful,’” Cordero says, “I couldn’t get away from the idea of education. Thus the idea of Gradsave came to be.” Miami-based Gradsave is, simply put, a crowdfunding platform for college savings—meant to simplify the process for new parents and help friends and family give gifts with impact.
That the price of college is ever-increasing is only the first in a series of hurdles that young parents face when considering education savings. I only have to look to my own sister, a mother of two, to see that the hurdles can seem so high that parents can be paralyzed with fear.
“If you project the cost of college for a child born today, it’s astronomical,” Cordero, a Harvard MBA born in Puerto Rico, says. A college education that costs $60,000 a year in 2013 could cost $500,000 for a four-year degree for someone born today if the costs continue to rise at a 4% annually–and some experts project that rate of growth much higher.
It’s easier to focus on expenses that are more immediate, he says–like daycare, diapers and rent. But the Gradsave thesis is that getting new parents to realize how saving even the tiniest amounts early and often can go miles toward funding a college education. “Think of the alternatives,” Cordero warns. “Would you rather stay paralyzed and force your child to take on a loan burden that could have been partially alleviated by savings?” That’s guilt enough to move even the most cash-strapped parents into action.
Cordero plans to make saving for college simpler—and more importantly less scary—through a combination of education and online tools that accept one-time gifts and recurring payments from friends and family members to help chip away at costs—and collect interest over time. After choosing a state-sponsored 529 savings plan, family members can create a profile connected with the account that creates a unique link (think gradsave.com/megsfuturechildren). Cordero believes that link, when included on birth announcements, baptism invites and birthday cards can, over time, be the difference between mounting student loans and a debt-free education.
The service is fee-free, which Cordero hopes will help to bring users to the site over the coming months. Gradsave is, of course, not without competition; Sallie Mae Ugift and FiPath both help family and friends contribute to savings accounts. But Cordero believe he’s found a niche among privacy-concerned young parents. Gradsave users don’t need to share anything more personal then the child’s name, he says, and no social security numbers are collected on the site.
Crowdfunding has become commonplace these days—my Facebook streams with requests for help with studio albums, charity marathons and startups—but third-party savings sites like Gradsave believe that the process is particularly in tune with the “it takes a village” mindset of raising kids. The financial reality of college savings is a dark one—and contributing directly to a child’s 529 (for anyone other than a parent) can be frustratingly complex. Can Cordero convert aunts, uncles and godparents into givers of bank account information rather than stuffed animals, Legos and American Girl Dolls?
That remains to be seen. Cordero concedes that “PANKs” (Professional Aunts with No Kids) are a group of savers he’d especially like to target. When I call him a “PUNK” he just laughs. But with nearly 10,000 registered savers on the site in the past 12 months (including some kids who have yet to be born), he’s off to a
crawling toddling running start.
Source: Meghan Casserly – Forbes