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AOL Doubles Commitment to Upromise College Savings

America Online Inc. struck a deal that doubles member savings for all Upromise purchases made at thousands of participating grocery and drug stores, McDonald's restaurants and ExxonMobil gas stations.

The effort strengthens a three-year alliance with Upromise Inc., Needham, MA, a privately funded college savings service. AOL is starting a $30 million online and offline marketing campaign to educate its 24 million members about saving for college and the benefits of enrolling in Upromise.

“They see this as a way of being loyal to their members and generating greater loyalty from them,” said Susan Muriel, senior vice president and chief marketing officer of Upromise.

AOL members register at www.upromise.com, entering credit, debit, grocery or store card information. Each time members shop at a participating merchant using a registered card, part of their qualified spending goes into a Upromise account.

More than 1 million AOL members are enrolled in Upromise. They link their AOL account with Upromise, and the extra savings is automatically credited.

In addition, AOL members who buy using their Citi Upromise card get a 20 percent college savings on all Upromise items at participating grocery and drug stores. They also receive a 5 percent college savings on AOL membership fees, 4 percent on gas purchases at Exxon and Mobil stations and 1 percent elsewhere.

Coca-Cola Co., ExxonMobil Corp., Kellogg Co. and McDonald's Corp., among other Upromise contributing partners, also increased their existing contribution levels for May.

“Three-quarters of their members log onto their [AOL] site every day,” Muriel said. “So it's the whole ubiquity, it's the everydayness that seems to synergize with the Upromise program and the grocery stores, ExxonMobil and McDonald's.”

And America Online's deal with Upromise stretches beyond May. Plans call for integrating into the AOL service through AOL alerts and Upromise account updates. Also, AOL “Buddy List” members soon will have the option via a click to join Upromise's “Family and Friends” program to support a prospective student.

America Online's marketing campaign will spread the word further through radio, television, print and banner ads, along with other promotions to encourage current and potential AOL members to enroll.

“What it does is it gives us a huge awareness which we as a small company couldn't hope to gain,” Muriel said.

Upromise aims to help families ease tuition commitments to their children's college education via their own savings efforts.

According to The College Board's Trends in College Pricing Study 2003, average tuition and fees in the past 10 years rose 47 percent at four-year public colleges and universities and 42 percent at private colleges. The increases have outpaced inflation.

That study found 70 percent of Americans have saved less than 10 percent of what is needed to finance their children's college education.

Upromise hopes to change this state of affairs. The free-membership service lets families automatically save money for college through everyday purchases at more than 18,000 grocery and drug stores, 15,000 gas stations, 9,000 restaurants, 7,000 hotel properties, thousands of retail stores and 200 online stores.

This way, families can create their program through tax-advantaged 529 college savings plans or by using Upromise contributions to help pay off student loans. Upromise Investments Inc. offers brokerage service. More than 4.5 million families nationwide have signed up to save for college via Upromise.

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