Saving for college: the basics

Any amount saved for education helps, and starting small is fine. Here's an overview of the common options so you know what questions to ask.

Common options

• 529 plans: education savings plans sponsored by states, with tax advantages for qualified education costs; many states add a state tax benefit
• Coverdell education savings accounts: smaller contribution limits, more investment choices
• Regular savings or investment accounts: flexible, without the education tax benefits
• Custodial accounts (UGMA/UTMA): money belongs to the child when they reach adulthood

Before you choose

• Check your own state's 529 plan first for any state tax benefits
• Compare fees
• Make sure your own emergency fund and retirement saving are on track too
• Rules and limits change; read the plan documents or ask a qualified professional

General education, not investment or tax advice. Your Money Stretcher isn't paid by any bank, lender or company mentioned here.