Fintech Offers Alternative to Save for Childrens’ Futures

March 19, 2021
Kevin Larkin

One of the most important decisions new parents are faced with is the best way that they can set their child up for future success when they become an adult. For many, that means opening up an account to slowly save up for their child’s college tuition, but could there be a better and more efficient way of doing this? In an effort to do this, Ksenia Yudina launched a fintech startup by studying over 500 college saving plans and creating a simple and affordable way for parents to tackle this issue. Her company is called UNest, and when surveying her customers’ needs, Yudina found that many of them didn’t want to save exclusively for college, in the event that didn’t end up being the right path for their child and they didn’t want that money to be locked somewhere where penalties could arise for spending elsewhere. In order to do this, UNest offers what’s called United Transfer to Minors Act (UTMA) accounts, which don’t penalize minors for spending funds on non-college expenses or endeavors. 

This option seems to only be growing in popularity, as there has already been a growing amount of skepticism about the true value of a college degree. Especially now with the pandemic and money being a lot tighter for many people globally, are rising college tuitions for a four year bachelor’s degree worth it anymore? To many it may not be, and having a smart plan to save for a child’s future whatever that endeavor may be is becoming increasingly demanded. However, one of the main reasons one of the over 500 college savings plans are often preferred if there is a very high likelihood that the child will be attending a four year university is that they typically offer tax breaks on college essentials such as tuition, books, room and board, meal plans and other college essentials. These other college savings plans also may look better for qualifying for financial aid through the government than another alternative savings plan. UNest hopes to make the transition for parents looking to switch from a typical college savings plan to one of their plans seamless, by offering a bonus that typically covers the penalty from withdrawing from another plan. Yudina says that the main goal with UNest is to offer flexibility, as there is no telling what the price for colleges will be in a decade or two from now when it’s time for their child to attend and those savings may be better used for something such as a learning a trade, a car, or a house.

Leave a comment