529 Savings Plans

529 plans allow families to save for college tax free. 529 plans are offered through individual states but are often managed by financial institutions such as mutual fund companies.

Through 529 plans, you contribute money to purchase tuition credits for your child. The money is invested so it will earn enough interest to keep pace with future college expenses.

Two types of 529 plans are available:

• Prepaid tuition plans. Usually funds from these plans can be used only for tuition and fees — not for other expenses like books or housing.
• College savings plans. Funds from these plans cover tuition as well as other expenses such as books and housing.

Here are some state-specific tuition savings plans.

• University of Alaska College Savings Plan (866.277.1005)
• Idaho College Savings Plan (208.334.3200)
• Oregon College Savings Plan (866.772.8464)
• Washington State's Guaranteed Education Tuition Program (GET) (877.438.8848)

Coverdell Education Savings Accounts

Coverdell Education Savings Accounts used to be called Education IRAs. The interest earned on the money invested is tax free. When you withdraw the money, you aren't taxed as long as you use the funds for qualified college expenses. Higher education tuition, fees, and room and board are generally considered valid expenses.

These accounts also can be used to pay for qualified elementary and secondary education expenses.

For more information about 529 plans and Coverdell Education Savings Accounts visit:

• College Savings Plans Network provides detailed information about 529 college savings plans and allows you to compare plans from around the country.
• Mapping Your Future — for a complete list of pre-paid tuition plans across the country.
• College Board — for more detailed information about pre-paid tuition plans.
• U.S. Securities and Exchange Commission for more information on college savings plans.
• Internal Revenue Services for more information on the Coverdell Education Savings Account.