Spend and Save: A new company has launched a college-savings plan that promises to help families save money for their children’s future education when they buy new cars, enjoy dinner and a night out on the town, or make other purchases.
Upromise Inc., based in Brookline, Mass., announced the program at an April 24 news conference in New York City. Officials also provided a rundown of the companies that have agreed to participate in the endeavor, including big-name corporations such as AT&T, Borders Inc., Century 21 Real Estate Corp., Citibank, Coca-Cola, General Motors, and drug store chain CVS Corp.
The plan allows individuals to start a family-savings network that can include parents and two other family members. A percentage of dollars spent with Upromise partner companies will go into college-savings accounts.
For example, AT&T will contribute 4 percent of customers’ residential charges to their Upromise accounts. Seventy online retailers have agreed to kick in up to 12 percent of purchases made through Upromise. And Toys “R” Us Inc. will contribute 2 percent of purchases to the account. The participating companies also pay Upromise an undisclosed sum to join the program.
Parents also can have their money put into a guaranteed college-savings plan managed by Salomon Smith Barney or Fidelity Investments. According to a study commissioned by Upromise last fall, tuition at the average four-year college will more than double over the next two decades—to $15,879 from $7,472 in today’s dollars—if present economic trends continue.
Upromise, whose staff includes former U.S. Sen. Bill Bradley as an adviser and a board director, says that a family making $60,000 per year would be likely to save at least $20,000 over 15 years in the program.
Upromise CEO Michael Bronner, who dropped out of Boston College because he couldn’t afford the tuition, said he hopes to encourage families to start saving for college as early as possible.
“We’re trying to overcome this epidemic where people aren’t saving,” Mr. Bronner said, adding he wants “to create a movement where people start saving for college.”
Participating companies will be featuring Upromise in millions of mailers, bill inserts, and circulars, and in store displays at 45,000 locations nationwide.
A recent study by Washington-based Hart Research Associates found that 82 percent of parents believe that college is moving out of financial reach, and half of the surveyed parents with college-bound students had saved $1,000 or less for college.
—John Gehring
