College Savings Plans2017-07-18T14:42:59-05:00

Paying for College

College Savings Plans

College savings plans are an ideal way to set aside money to pay your higher education expenses. If your family starts early enough, you may be able to save a substantial amount for college before you’re ready to attend.

State 529 plans and Coverdell accounts are two ways to set aside money for college students that can grow tax-free. There are restrictions. Be sure to research your state’s plan so you know the maximum that can be contributed each year, and how much can be taken out at a time.

A 529 plan lets you save for college in either of two ways: by prepaying tuition and by savings plans.

  • Prepaid tuition plan
    Purchases tuition credits at participating colleges and universities at current tuition prices, and use them when the student attends college. Only a few states offer prepaid tuition plans.
  • 529 savings plan
    More traditional savings plan where money grows tax-free. All states offer 529 plans, and you don’t have to live in a state to participate in that state’s plan. Check out more information here.
The Coverdell Education Savings Account (ESA), is like an individual retirement account (IRA), but for education.

  • Covers all education
    elementary, secondary, and higher education costs.
  • Tax free
    Money in the account grows tax-free, and isn’t taxed when it’s used for the beneficiary for tuition, fees, books, supplies, or equipment for school.
  • Use with a 529
    You can contribute to both a 529 plan and a Coverdell ESA for the same student in the same year.

Learn More About Paying for College: