Rewards programs or points programs for college fall into two major categories:
1.) rewards credit cards and
2.) rewards for specific purchases programs.
The basics of the programs are essentially the same. You spend money at the grocery store, gas station, and restaurants on items you would normally buy and you earn points or rewards dollars that are placed into a college savings account, typically a 529 tuition account.
There are a variety of college rewards credit cards available. Most pay up to 1% into a 529 college savings plan for all purchases made. Some cards do pay more than 1%, but that is a general average. Let's take a look at the math behind this. If you open one of these card accounts when your child is born, you'll have 18 years to earn rewards on purchases. Let's say that you are a responsible credit card user and pay the balance every month. You use your card for gas, groceries, and at restaurants with an average spent of about $ 400 per month. This means you're spending approximately $ 4800 per year which means you're receiving $ 48 annually into a college savings account. After 18 years, before any interest or growth earnings, you will have accumulated $ 864. Even with a high growth rate on the 529 plan, you're not going to be able to pay for college with that savings amount. But every penny saved is one cent less that you wont have to pay in loan interest.
In addition to credit card rewards programs there are a variety of programs that allow you to earn points – which can be turned in to cash – for purchases of certain items at stores, restaurants, and other locations that you shop every day. These programs include:
Each of these programs requires a variety of stipulations and conditions. For example, in order to access dollars in your uPromise account to make payments towards a student loan, that student loan must be held by a specific loan service provider. SAGE scholars offers tuition discounts for students attending specific institutions. The benefit of all of these programs is that they are free. With a little time in your child's early years you can save substantial amounts of money with these programs if you work them to the best of your ability. Careful research and planning up front with one of these programs can provide valuable rewards for funding your child's education.
Besides these programs being free, they also pay much higher rewards than the credit card rewards programs. uPromise pays reward amounts ranging from 1% to 25% on the products and services which are eligible for rewards. And, you are not the only one who can fund your child's education with these programs. Upromise allows students to be selected by several family members and friends as the recipient of their savings.
So, if you have family and friends who would be willing to register their credit cards or discount cards from particular vendors with the uPromise web site then this may be an easy way for your child to earn even more money towards their college education.