The Federal Reserve calculated U.S. debt from student loans was more than $1.5 trillion at the end of June. As that number continues to rise, and more students take out loans to attend college, FinTech companies have been coming up with new ways for consumers to invest — with college savings in mind.
Recently, U-Nest, a college finance app, launched with the intent purpose to simplify saving for future college expenses through 529 investment plans. These plans, according to the Securities and Exchange Commission, are typically sponsored by the state and can come with special tax benefits like deducting contributions from state income taxes.
According to the U-Nest’s website, CEO Ksenia Yudina was inspired to found U-Nest by her experience working at an investment management firm and the complexities of setting up 529 college savings accounts for her clients.
U-Nest asks customers to set a monthly contribution goal for their account using a college savings calculator. It then compares hundreds of 529 plans and picks one based on the customer’s responses.
529 plans can be invested in mutual funds, exchange traded funds, and other portfolios to accrue interest. Some plans come with fees. Investing in a 529 savings plan, the SEC notes, can also impact financial aid eligibility.
Savvy Financial is another company that developed an online 529 account app. Savvy differs from its U-Nest competitor in that it partners with investment advisor Vanguard to offer with its 529 account an “age-based investment option,” which automatically adjusts the amount parents invest each year as their child ages.
Besides apps geared specifically for school costs, there are many other handy FinTech savings and investment apps.
One is Acorns, which rounds up a user’s every purchase to the nearest dollar, then invests the difference. There is also Qapital which is similar to Acorns but also allows users to invest a flat amount monthly.