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How to start saving for college right now on your phone

Shawn M. Carter

Saving for college could start on your phone.

Higher education firm CollegeBacker, which helps students and families save for school, has developed a new mobile app that lets parents set up 529 college savings accounts.

CollegeBacker: College Savings guides users through the process of creating a tax-free investment fund, letting them seamlessly link their bank accounts for one-time or automatic contributions, and allowing them to track the progress of their nest eggs.

“The millennial generation does everything on their phones, so it made sense to launch our service as an app,” Jordan Lee, the company’s founder and chief executive officer, said in a statement. “Our app makes it easy to start a savings plan any time, anywhere and then invite family and friends to contribute or send the gift of college savings to another family.”

CollegeBacker said users save 43 percent more than traditional savers through gifts.

The app also gives investing advice: “Answer a few simple questions and CollegeBacker will help you choose the college savings plan investment option right for your child,” the description reads. “We only recommend a low-cost, highly-rated 529 plan and will help you choose a portfolio that automatically reduces risk as your child ages.”

The rate of return on 529s depend on factors like where you live and the type of account you open but could hit around 7 percent annually and grow interest in the background.

“Families are saving more for birthdays or baby showers, holidays and graduations,” the description says. “More than 50 percent of families who have been on the platform for a year have received gifts compared to an industry average of 1 percent to 2 percent.”

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Another feature: no fees. The app makes money through voluntary tips instead of through the mandatory monthly fees that some other apps employ.

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Apps like CollegeBacker are becoming a big draw as college costs continue to rise. One year at a four-year college averaged $19,800 in 2018 and could nearly double by 2036.

The outstanding student loan debt in the United States: more than $1.5 trillion.

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CollegeBacker is only available for iOS but will soon drop on Androids. Through its app and other offerings, the company said it helped save families $12 million in student debt.

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