Business Rebrand and New Financing
Backer, formerly known as CollegeBacker, is an education savings startup that provides families with resources to begin saving for their children’s education through a 529 plan, also known as “qualified tuition plans.”
The United States (US) Securities and Exchange Commission (SEC) states that a 529 plan is a “tax-advantaged savings plan designed to encourage saving for future education costs.” The SEC also details the two different types of 529 plans: prepaid tuition plans and education savings plans.
In a blog post that doubled as a press release, the startup company revealed it rebranded from CollegeBacker to Backer “to reflect the many possibilities” 529 plans offer. 529 plans can operate solely for college education savings, but can also be applied to K-12 education, apprenticeships, and student loan paydown.
The blog statement went on to say the rebrand is meant to embody the broader philosophy of social saving that Backer supports. Adding that personal finance does not have to be a solitary experience like we are conditioned to believe; it can be part of a larger community where people help each other avoid mistakes and debt.
According to the business website, the Backer app has helped American families avoid nearly $53 million in student loan debt and helped families save more than $20 million dedicated to future education. Furthermore, the app allows for crowdfunding, resulting in 40% of all funds saved coming from friends and family.
The blog post also features a statement from Backer announcing the business raised $8.4 million in venture capital led by Crosslink Capital with participation from other new and existing investors. As a result of the new capital, Jim Feuille, an early investor and board member at Chime, Pandora, and Personal Capital, will join the Board of Directors at the startup company.
Although the company did not disclose its plans for the new funding, founder and CEO of the business, Jordan Lee, said in a statement, “From day one, our mission has been to revolutionize how Americans save money by making the process more collaborative...As Backer, we will continue to propel the 529 industry forward technologically and support our families in new ways, making it easy to help loved ones arrive at life’s biggest milestones with financial security.”
Student Debt Crisis
The startup company has an admirable mission to help families become proactive when it comes to their children’s future education and explore ways in which to avoid or decrease potential student loan debt.
Forbes reported in September 2020 that the cumulative federal student loan debt had reached over $1.54 trillion, more than double the amount in 2010. The report added that the student debt crisis is due in part to the fact that tuition costs have increased 36% from 2008 to 2018 even though tuition only accounts for 48% of the total cost of attending a 4-year public institution.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.