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College Financing and Career Guide 2007
Financing for college
Don't despair! From student loans to college grants, there are many options for paying for an education.
Financing for college
Bonds, custodial accounts: alternatives to 529

A Coverdell education savings account or 529 prepaid tuition or savings plan can be the right choice for some parents. But what if your child decides not to go to college or you just want more control over your investments? If that's the case, you may want to consider education bonds and custodial accounts.

At a glance
Bonds Custodial accounts

EE bonds and Series I bonds are both part of the Education Bond Program created by the Treasury Department in 1990. Although these investments may not make you rich, they aren't risky.

One of the key benefits of this program over 529 plans is that with these investments you won't have to pay a penalty if the money is not used for your child's education. Bonds can be purchased for as little as $25, which will yield $50 upon maturity. Paper EE and I bonds are offered in eight denominations from $50 to $10,000.

When using bonds for your child's education, your child must be listed as a beneficiary, not as a co-owner. If you are using the bonds for your own education, the bonds must be registered in your name. The post-secondary institution must qualify for the program (a college, university or trade school) and meet the standards for federal assistance, such as guaranteed student loan programs.

-- Posted: July 2, 2007
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