1. Do Series EE Bonds Offer Any Special Advantage if Used to Save for College?

    Children Doing School WorkThere are many ways to save for a child’s college education and maximize the funds with such tax-sheltered savings as Series EE Bonds.

    A Series EE Bond also known as a Patriot Bond is a low-risk investment whose earnings are usually subject to Federal income taxes. However, a savings bond education tax exclusion makes it possible for U.S. taxpayers to cash in bonds tax-free, when the money earned is used to pay for qualified higher education expenses in the same year that the bonds are redeemed. Examples of qualified education expenses include tuition and fees, but exclude room, books and board.

  2. Beat the College Inflation Rate

    College Graduation Cap and Diploma“Inflation.” The word may put a chill in the hearts of people everywhere, but what does inflation do to college costs?

    Just as the general rate of inflation represents increases in the cost of living from year to year, the college inflation rate represents increases in the cost of tuition and fees from year to year. For parents and grandparents who are saving for their children’s or grandchildren’s college education, it’s essential to choose options that keep up with college inflation.

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    Categories: College Planning
  3. College Savings Accounts

    Parent Reading With ChildShould I save for college in my name or my child’s name?

    Saving for your child’s college education represents an investment in your child’s future. After all, the average cost of a college education has been rising steadily for decades – about 7% per year according to Forbes business magazine. That trend is expected to continue indefinitely.

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    Categories: College Planning
  4. Tax Advantages With an Education Savings Account

    Education Savings Account Tax AdvantagesA qualified education savings account usually offers federal tax advantages to participants. The key factors are “how much” and “how they work” for investors. While you can use any savings or investment account to plan for college, qualified college investment funds offer tax advantages that standard accounts do not.

    For example, a Coverdell Education Savings Account (ESA) offers tax-free earnings increases, if the parent qualifies. If the parent (or child) has “modified adjusted gross income” less than $110,000 (or $220,000 for joint tax returns), and your child is under 18, you qualify for these college savings accounts. If you only withdraw funds for your child’s education expenses each year, these withdrawals are also tax-free.

  5. Compare College Savings Planning Option Features

    Compare College Savings OptionsWith consistently rising education costs, college savings planning is a necessity. But which plan is right for you? Consider your financial situation now and in the future, the age of your child when you start, and then set reasonable goals for yourself.

     

    Federal Government Plan

    Saving money for college can be accomplished courtesy of the US government. Your Congress sponsors the Coverdell ESA (education savings account) plan for those earning less than $110,000 (single tax filer) or $220,000 (joint tax filers) per year.

    Although it has a modest annual contribution limit–$2,000 per student per year—withdrawals are tax-free if used for qualified education expenses. Qualified expenses include tuition, room, board, fees, and supplies.

    You’ll also enjoy personal investment flexibility, as you can invest in stocks, bonds, mutual funds, and cash equivalents. You have no restrictions on the number of trades (buy or sell) you want to make.

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    Categories: College Planning