Every year the costs associated with going to college seem to rise, and parents naturally worry about how they are going to afford to send their children to college. The good news is that there are a number of ways to save that will make paying for college more manageable.
You can start an education savings account without having a lot of money. While it’s best to start early, it is never too late to start saving. Section 529 College Saving Plans and Coverdell Savings Accounts are two of the most popular education savings plans. While 529 plans are designed for higher education, Coverdell Savings Accounts can be used for either high school or college education costs. While there are no income limits for contributing to the 529 plan, there are some restrictions for the Coverdell Savings Account. With both plans, the funds grow tax deferred and can be distributed federally income tax free if used for qualifying education costs. This is just one aspect that makes these plans desirable.
When it comes to education, there are many decisions to make, and planning for the financial aspect of it can be a complex process. Plans which are tax deferred and tax exempt (for qualified expenses), such as the 529 College Saving Plan and the Coverdell Savings Accounts, can be especially helpful. It is never too early, or too late, to start saving for a child’s or grandchild’s education, or even your own.