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College Savings Plans

A college savings plan is a special way for families to save money for future college or career school costs.
The money you put into the plan can grow over time, and you may get tax benefits too. These plans are meant to help with big costs like tuition, fees, books, and housing.

One of the most popular types is called a 529 Plan, but there are other savings options too.


Types of College Savings Plans:
 

  1. 529 College Savings Plan

    • You can open a 529 plan through your state or a private program.

    • The money grows tax-free and you don’t pay taxes when you use it for qualified education expenses.

    • You can use it for colleges, universities, trade schools, and even some K-12 tuition and apprenticeship programs.
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  2. Prepaid Tuition Plans

    • These let you "lock in" today’s tuition prices at certain colleges for the future.

    • Only covers tuition and sometimes mandatory fees — not housing or books.
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  3. Education Savings Account (ESA) (also called a Coverdell ESA)

    • A savings account where money can grow tax-free if used for education.

    • Has lower yearly contribution limits but can be used for K-12 and college expenses.

       

Helpful Information
 

  • Who Can Open a Plan?
    Parents, guardians, grandparents, and even family friends can open and contribute to a plan.
     

  • Who Can Use the Money?

    • The student (the "beneficiary") can use the money for approved education expenses.

    • If they don’t use it, you can often switch it to another family member.
       

  • Do I Have to Use My State’s Plan?
    No! You can shop around and pick the 529 plan that works best for you, even if it’s in another state.
     

  • What If My Student Doesn’t Go to College?
    You can transfer the savings to another family member, use it for future schooling, or withdraw it (but taxes and a penalty may apply).

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Helpful Tools and Resources

 

Tips for Parents and Guardians

  • Start Early: The earlier you start saving, the more time your money has to grow. Even small amounts add up over time!

  • Set Automatic Contributions: Set up monthly deposits so saving becomes a regular habit.

  • Check for State Benefits: Some states offer tax deductions or matching grants when you open a 529 plan.

  • Know the Rules: Understand what expenses are covered so you don’t get taxed later.

  • Review Your Plan Each Year: Update your savings goals as your child grows and as college costs change.

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