Saving for College: Options for Every Family

When it comes to saving for your child’s college, there are so many options it can be overwhelming. MESP 529, Coverdell Education Savings Accounts, Gerber Life College Plan, IRAs, bank savings accounts, money stuffed in a mattress. Which is the right choice? Well, the answer is more about what is right for YOU.

Piggy-bank-free-license-CC0For many families, it’s a challenge to balance day to day expenses and have some left for savings for the family; and that’s before setting aside some savings for something that’s perhaps 5, 10, 15 or 18 years away. It can seem a low priority when the goal is that far out, or at least a lower priority than other things you need to spend your hard earned money on. It can be especially daunting when money is tight.

However, I have come to realize how quickly time moves the older we get so for our family, making room for college savings was as imperative as paying the light bill.

While I was lucky enough to have a full-time job that offered tuition reimbursement for my education and walked that stage debt free, my husband took out students loans for his schooling which we will continue to pay for years to come. The benefit has outweighed the cost in so many ways, but it has really helped us realize that we didn’t want our child saddled with education debt for much of her adult years if we could help avoid it. That’s not to say she won’t be asked to contribute in her own way by perhaps having a part-time job or working for scholarships and grants. We surely want to teach her the benefit of working for something, the value of money and to appreciate the blessing of education. However, if we can help her avoid starting her adult life in debt, then that is a priority for us.


So began the search for the right way to save for our family. We recruited friends, researched online and eventually picked what felt right for us.

Here is what we learned in the process – options that fit for families in a variety of different income levels and situations:

NOTE: This is not meant to be a recommendation of any one plan over another. Nor does this list include all applicable information for all situations. Please use the links provided to assist in your own research on what is right for you and seek professional investment advice for any questions you may have.

529 plans

  • Automatic payments.
  • Tax advantages.
  • Use at any school nationwide (tuition, books, computer equipment etc.)
  • Monetary gifts can be added to your account.Investment type flexibility.
  • Can be transferred to another qualifying family member of the current beneficiary. However, if the money is not used for school, withdrawls are taxed and penalized.

Certificate of Deposit

  • Upfront investment can be significant.
  • Low risk set term/rate for investing.
  • No access to money without penalties during that term.
  • Laddering CDs can give you access to your invested money at different intervals when one matures as you start another.

Coverdell Education Savings Accounts 

  • These accounts work like a 529 plan except that certain K-12 purchases and considered qualified purchases.
  • Lower maximum contribution limits, available only to families below a specific income level.

Custodial Accounts (Uniform Gifts to Minors Act/Uniform Transfer to Minors Act)

  • A simple way for a minor to own securities without requiring the services of an attorney to prepare trust documents or the court appointment of a trustee.
  • The donor designates a trustee and income must be reported for the minor.
  • Money is used at the discretion of the beneficiary once they are of legal age.

Educational Savings Bonds

  • Interest-bearing U.S. government savings bond that is guaranteed to at least double in value over the initial term of the bond, typically 20 years.
  • Series EE bonds are typically exempt from state and local taxes
  • Must be held at least one year before redeeming.

Gerber Life

  • Fixed monthly payment.
  • Guaranteed payout at maturity.
  • Doubles as life insurance for parent.
  • Money can be used at investors discretion after payout.

Individual Retirement Account (Roth IRA)

  • Investment is made with taxed income so no penalty for early withdrawls on qualified distributions such as college expenses.
  • Must have investment for 5 years before a withdrawl can be made.

Taxable Accounts (Bank Savings Account)

  • Guaranteed amount of what you have saved, no loss on investments.
  • Some moderate interest yields.
  • Can add and withdraw at any time for any reason.
  • Money can be used for any purpose, not just school.
  • Can add any birthday, holiday or special occasion monetary gifts to this account.


  • No fixed investment.
  • Earn cashback to save on every day purchases.
  • Family members can designate their cash back earnings to your savings account.
  • This can also be used to pay down qualified current student loans for parents!

Use the comparison tool for more info!


Have YOU used any of the above savings plans?

What steps, if any, are you utilizing in your home to plan for future education costs?


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.