The ways you can invest to pay for college — including 529 plans and Coverdell accounts — are numerous and varied.
There are a number of ways to save for college, and many even have tax advantages. In this chapter, we’ll discuss all of the options, including 529 savings plans and prepaid tuition plans, Coverdell accounts, EE and Series I education bonds and custodial accounts like the Uniform Transfer to Minors Act and the Uniform Gift to Minors Act.
529 Savings Plans
Under these state-sponsored plans, you can save for any accredited college or university and choose where to invest the money.
529 Prepaid Tuition Plans
These plans let you purchase units of tuition at a state college or university at today’s prices, but there are financial aid implications with them.
These accounts allow you to contribute up to $2,000 annually and the money grows tax-free. See what other benefts this federal plan offers.
Comparing education savings plans
This chart compares the 529 plans and the Coverdell account in brief.
Education bond programs and custodial accounts
The pros and cons of EE and Series I education bonds and UGMA and UTMA custodial accounts are described.