Working with big-name corporate sponsors such as McDonald's and Toys-R-Us, Upromise hopes to attract investors by giving rebates for college whenever a costumer purchases something from a sponsor.
Christi Avram, a spokeswoman for Upromise, said Upromise makes use of established state college savings plans. "The money gets accrued into a Upromise account, and every (fiscal) quarter it gets swept into a 529 account, so it is money earmarked for college only," Avram said. The 529 accounts are state-sponsored financial aid programs that create tax-free savings accounts or prepaid tuition plans.
Avram said one of the most important parts of Upromise's offer is that its services are totally automatic. "We don't have a member card. It's all automatic. You're buying what you usually do."
Avram also said though the program is young, it still has many users. "The program is only about a year old, but we already have over a million members signed up with the program," Avram said.
Shirley Ort, UNC director of scholarships and student aid, said the program is too new for her to make any comments but that it looks promising.
"I don't have enough knowledge to endorse it, but as an idea I'd pursue it," Ort said. "I think it looks kind of innovative."
Ort also said she has seen similar programs before. "The closest thing I have seen would be a youth program in Washington state, where we created a mileage program that rewarded students for good grades and behavior, but it had no business links," she said.
But Steve Brooks, executive director of the N.C. State Education Assistance Authority, said he thinks Upromise may be a good idea but that it might not be useful to North Carolinians.
"It probably sounds better than it is, but I don't really know that. It is a company that is allied with firms that (North Carolina's 529 plan) doesn't use," he said.
