It takes a village to raise a child and, sometimes, to pay for that child’s college education.
At least that’s how Sootchy Inc. sees it.
The downtown-based startup wants to help parents leverage their friends and family networks to help cover college costs.
“By investing minimal amounts — just $4 a month or $50 a year, for instance — friends and family members can set their loved ones up for success with fully funded college savings accounts,” said Sootchy Chief Executive David Adefeso, who added that a child’s education fund can accumulate more than $100,000 by age 18 if parents follow Sootchy’s investing and gifting guidelines beginning at birth.
Sootchy’s platform lets parents establish and manage 529 plans, which provide a tax-advantaged option for families to save for college educations.
The company has developed an algorithm to generate recommendations from dozens of 529 plans, based on factors including a family’s income level and location. Sootchy will charge users a $2.50 monthly subscription fee, according to Adefeso, who added that the monthly fee might change in the future.
The platform’s crowdfunding features allow families and friends to set up paperless contributions as gifts for birthdays or graduations or to celebrate achievements. Contributions will grow tax free, according to the company. Potential contributors need to sign up for the platform to make contributions but will not be asked to pay the monthly fee.
“It’s almost like Venmo. You use it, and then you invite someone else to use it,” Adefeso said. “We expect it to become something that’s almost a necessity in America.”
He said the artificial intelligence-driven platform will also generate recommendations for user connections, based on the contributor’s connection to the student and past activity.
“There’s aunts and uncles. There’s your financial adviser, your pastor, your friend from high school, your colleagues at work, your boss. … There’s a lot of people out there. If they knew that you had a child and your child intended to go to college, they’d be willing and happy to join your universe of what we call My Circle,” he said.
Sootchy will be available in October for desktops and on iOS and Android devices, Adefeso said, adding that the company will launch a marketing campaign in September.