Jennifer Piponnian's relatives are spending her way to college.
Her parents, grandparents and an aunt have all signed on to a "loyalty" buying program called Upromise that rebates a small percentage of their purchases and sweeps them into a college savings account for the La Habra Heights teen. In less than a year, more than $400 in rebates has been deposited into the account.
Of course, the rebates won't be nearly enough to finance four years of higher education. But it's a start--or, rather, a supplement to the savings that her family already has started.
"I think this is something that every person who has a child who is dear to them ought to do," said Jennifer's father, Pierre Piponnian, a financial consultant with Salomon Smith Barney in Pasadena. "It's not a huge amount, but it makes a difference."
Massachusetts-based Upromise is just one of three companies that offer rebate programs to help parents pay for college. BabyMint, headquartered in Atlanta, and Plano, Texas-based EdExpress offer similar, yet slightly different, programs.
All three are so-called loyalty programs, which operate much like airline frequent-flier plans. When participating consumers shop with participating merchants or buy certain brands of merchandise--such as Kellogg's cereal--they get a cash rebate that can range from 1% to 20% of the purchase price. Instead of getting a check or credits toward a free airline ticket, the cardholder directs the rebates into a college fund for a designated beneficiary.
Two of the three companies--BabyMint and Upromise--also offer credit cards that are similar to the frequent-flier cards available through MasterCard, Visa and other issuers. No matter where the cards are used, 1% of the charges is rebated to a college savings account. If you charge $18,000 a year, for instance, you'll get $180 in rebates.
Neither Upromise nor BabyMint charge an annual fee for the cards--a nice contrast to frequent-flier cards, for which annual fees can run as high as $75. The interest rates and credit limits on the cards vary, depending on the borrower's credit standing.
Beneficiaries of the savings generated from loyalty and credit card purchases can be either the participant, the participant's child, a relative or a friend--or, in some cases, a university or charity that the participant would like to help. Participants can switch beneficiaries at any time.
