Miami-based Gradvisor, which helps companies offer tax-advantaged college savings plans to employees, and Gusto, an all-in-one HR platform, announced a partnership on Tuesday that will allow Gusto’s more than 40,000 small and medium-sized businesses to create customized 529 savings plans for their employees, enabling them to save for their children’s college education.
According to a recent survey from The College Board, just 11 percent of companies offer 529 benefits to employees, and large companies are twice as likely as small businesses to do so. However, the benefit is likely to become more prevalent because 87 percent of millennial parents say having student debt motivates them to save for their children’s college education, Gradvisor’s co-founder and CEO Marcos Cordero said.
Gradvisor works as a roboadvisor, using algorithms and data to recommend the best 529 plan for each employee. Gradvisor users save earlier, starting when their child is age 5 rather than 7, and they save more – $236 per month vs. $175 per month– than non-users, Cordero said.
“We’ve always wanted to bring this benefit to smaller businesses, but it was difficult for us to scale on our own,” said Cordero, who launched Gradvisor in 2015. “By tapping into Gusto’s well-established ecosystem of 40,000 customers, we can now bring this benefit to a broader audience simply and automatically – helping small businesses and their employees to plan for the future.”
According to the College Board survey, the average cost of tuition and fees for the 2016–2017 school year was $33,480 at private colleges, $9,650 for state residents at public colleges, and $24,930 for out-of-state residents attending public universities and is one of the fastest-growing household expenses.
529 plans will be available within Gusto for an additional $6 per employee that registers to use Gradvisor. Gusto, headquartered in San Francisco with an office in Denver, offers companies an intuitive platform to manage payroll, benefits and HR. More information: gusto.com/product/529-college-savings.