When the Bills Come Due
Tread mighty carefully when tapping your college savings accounts
CONS
High fees on some plans. May limit your investment options.
PLAN TYPE
Coverdell Education Savings Account: Also tax deferred.
PROS
Money is not in the student's name.
CONS
Use money before student is 30, or earnings are taxable.
PLAN TYPE
Uniform Gifts to Minors Act: Account in child's name.
PROS
Taxes on income are paid at student's lower rate.
CONS
Reduces aid eligibility. Belongs to student at adulthood.
PLAN TYPE
Prepaid tuition plan: Pay now for future tuition and fees.
PROS
Parents can lock in tomorrow's tuition at today's prices.
CONS
Tuition credits reduce student's financial aid eligibility.
PLAN TYPE
IRA: Tax-deferred parental retirement account.
PROS
A possible source of funds, to be used only as a last resort.
CONS
May leave parents lacking money for retirement.
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