I was contacted by the founders and creators of this site called “Freshman Fund“.   The idea was born at a niece’s birthday party when founders were dismayed at how quickly she tore through presents with nothing left to show for the birthday.  An expectant father and doting uncles, these founders felt they would have been happier contributing to a college fund for their niece.  And thus a new site was born, “the Freshman Fund.”

How it works?  Simple, the parents set up a student page for their child.  They attach a 529 account to this page.  A 529 is a college savings account, which allows you to save money for college tax free.  Similar to a Roth IRA, only after-tax money can be deposited into the account, however all withdrawals for qualified education expenses are tax free.

Then you invite friends and family to deposit money into the account you’ve set up.  This is easily done with the site’s built in contact manager. It easily sends out mass emails as well as informs you if any contacts are already participating in with the Freshman Fund Network.  The site works all registered state and advisor sold 529 plans, and they are currently working to add prepaid tuition plans and TIAA-CREF independent 529 plans.

So what’s the site for? Well it’s basically a gift registry for your child. It’s registering for college and making it easily available for friends and family to donate money specifically for college instead of writing a check or giving cash.  This allows the giver to know that the money they “gift” is going directly into a college fund and not for purposes.  Also the founders are working to integrate the site with facebook or a person’s blog.  This will allow people to make contributions easily.

Unfortunately, there will be transaction fees to cover the costs of the gifts of 5% per contribution, although contributions from parents will be free of the surcharge. This will probably discourage some people from contributing.  However, I was informed that the “early adopters” of this new site will not be charged the 5% surcharge fee.

Finally I had an opportunity to interview over the phone, a current customer Mrs. Lisa Frese.  Mrs. Frese loves the Freshman Fund.  With 3 children, she was inundated with statements from separate account for each child from 4 different sets of grandparents who all started individual 529 account for each child.  Keeping track of all the investments was a huge mess.  She decided to use the Freshman Fund because then the grandparents could all contribute to the same 529 account and there would be less paperwork and clutter in her house.

She really loves the fact that everything is done online.  That deposits can be given online and cute gift certificates can be printed for gifts.  She feels that her children have everything and saving for college is so important and expensive.  But setting up the account and consolidating it in one place has been a lifesaver.  They only started in June 2008 but she can definitely see and appreciate all the contributions from her mother, sister, cousins, and friends.

I think this site is a very simply way to keep track of your 529 contributions from friends and family. It is convienent and secure in allowing the gift giver to be sure their contributions for a child’s college fund is actually going to the child and not being spent on anything else.  Please check out the Freshman Fund.