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College Savings Chart | Wescom Financial Services

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College Savings Plans

College Savings Facts

Parents of a baby born today would have to start saving $385 a month in order to afford housing and tuition at the average state school — but if they don't start saving until the child is in middle school — the required monthly savings amount jumps to $780.

Kent Smetters, Professor at the University of Pennsylvania's Wharton School

College Savings Plans Comparison

Find Out Which Educational Savings Plan is Right For You

  529 College Savings Plan Coverdell Education Accounts (ESA)
Benefits
  • Donor retains control of the account fund
  • Low maintenance
  • Simplified tax reporting
  • Flexible
  • Allows for substantial deposits
  • Funds can be used towards qualified graduate education cost

Can be used towards qualified education costs for elementary, secondary or college education.

Do earnings grow tax deferred? Contributions are made post-tax and are not tax-deductible; however earnings grow tax-free and qualified distributions are tax-free. Contributions are made post-tax and are not tax-deductible; however earnings grow tax-free and qualified distributions are tax-free.
Are distributions federal income tax-free? Yes, for qualified distributions. Yes, for qualified distributions.
What are the gift and estate tax benefits? Limit is $140,000 for married couples per year without gift taxes. Contributions are removed from the estate. Contributions are immediately removed from the estate.
Ability to change beneficiaries Yes. Yes.
Contribution Minimum Depends on investment plan. Depends on plan.
Contribution Maximum Up to $350,000 maximum in all account balances for the life of the account, depending on state. Contribution limit of $2,000 per year. Contributions must be made before the beneficiary reaches 18 years of age, unless the beneficiary is a special needs beneficiary.
What is the impact on financial aid? Account is measured as a parental asset and is assessed at a rate of 5.64%. If the account is in the child's name, 20% of the assets are counted against financial aid. If it is owned by the parent, it is counted at 5.64%.
Are withdrawals limited to educational expenses? Withdrawals can be used for eligible education expenses such as tuition, fees, books, equipment and for limited food and board cost at any college approved by the Department of Education. Some plans allow withdrawals for the cost of graduate school. Withdrawals can be used for eligible education expenses such as tuition, fees, books, equipment and for limited food and board cost for elementary, secondary and college educational cost.