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College Savings Plans: Ways to Save

As you start to save for college, consider three of the most popular ways to set up a college fund: 529 College Savings Plans, UGMA/UTMAs, and Education Savings Accounts (ESAs).

Each one offers different features and benefits. Other methods include high-yield savings accounts, life insurance, and mutual funds. A financial advisor can help you choose the best one for your needs.

529 College Savings Plan  
State-sponsored 529 plans are one of the most popular ways to save for college. You can invest in any state’s 529 plan regardless of your residence, but check with your own state’s plan first. Most offer special tax advantages1 for residents. 529 plans give you additional benefits such as:

  • The account owner has full control over the account, so you can be sure the money is used for college.
  • Your assets can be used for any qualified higher education expense, including tuition, fees, and certain room and board costs.
  • Earnings grow tax deferred and are free from federal income tax when used for qualified higher education expenses.2
  • Most plans offer gifting programs, which allow friends and family to celebrate milestones by making contributions directly into your account.
  • If you're not sure if a 529 plan is right for you, we have more information on how they work and what makes them tax-advantaged. You can also check out the SSGA Upromise 529 plan3, which is an easy and affordable way to save for college over time.

An UGMA/UTMA (which stands for The Uniform Gift to Minors Act/Uniform Transfers to Minors Act) is a custodial account usually set up at a bank. The assets in the account are designated for the child, but do not have to be used solely on education. Benefits include:

  • Flexibility – you choose how you want to invest the money, with options including mutual funds, stocks, bonds, or CDs.
  • Control – the money is still yours until the child reaches the age of majority, and then it belongs to the beneficiary. But keep in mind – it then becomes their choice whether or not to use the money for college-related expenses.

Education Savings Account (ESA)  
An ESA (also known as a Coverdell ESA) allows you to contribute up to $2,000 per year, per beneficiary to be used for education expenses like tuition and fees. The benefits of an ESA include:

  • The account owner maintains full control over the account until the beneficiary reaches 30 years of age. After that, any assets left in the account transfer to the beneficiary and may be taxable upon withdrawal.
  • As with 529 College Savings Plans, your earnings grow tax deferred and are free from federal income tax when used for qualified higher education expenses.2

Other ways to save for college

Upromise® by Sallie Mae® is a service that lets you earn cash back for college when you buy everyday items online, travel, dine out, and more. It’s free to join, and is an easy way to add to your savings while doing the things you already do.

Learn more

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College Ahead Plan for College

1 The availability of tax of other benefits may be contingent on meeting other requirements. Please consult your financial, tax, or other advisors to learn more about how state-based benefits and limitations would apply to your specific circumstance. You may also contact your home state's 529 plan(s), or any other 529 plan, to learn more about those plans' features, benefits and limitations.

2 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

3 For more information about the SSGA Upromise 529 Plan ("the Plan”) download the Plan Description and Participation Agreement or request one by calling 800-587-7305. Investment objectives, risks, charges, expenses, and other important information are included in the Plan Description; read and consider it carefully before investing. Ascensus Broker Dealer Services, Inc. (“ABD”) is the distributor of the Plan.

The SSGA Upromise 529 Plan (“the Plan”) is administered by the Board of Trustees of the College Savings Plan of Nevada (“the board”), chaired by the Nevada State Treasurer. ABD serves as the Program Manager. ABD has overall responsibility for the day-to-day operations, including distribution of the Plan and provision of certain marketing services. State Street Global Advisors (SSGA) serves as Investment Manager for the plan except for the Savings Portfolio, which is managed by Sallie Mae Bank, and also provides and/or arranges for certain marketing services for the Plan. The Plan's Portfolio invest in either (i) Exchange Traded Funds and mutual funds offered or managed by SSGA or its affiliates; or (ii) a Federal Deposit Insurance Corporation (FDIC)-insured omnibus savings account held in trust by the Board at Sallie Mae Bank. Except for the Savings Portfolio, investments in the Plan are not insured by the FDIC. Units of the Portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the Portfolio you chose. Except to the extent of FDIC insurance available for the Savings Portfolio, you could lose all or a portion of your money by investing in the Plan, depending on market conditions. Account Owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Upromise is an optional service offered by Upromise, Inc., is separate from the SSGA Upromise 529 Plan, and is not affiliated with the state of Nevada. Specific Terms and conditions apply to the Upromise service. Participating companies, contribution levels, terms, and conditions are subject to change without notice. Transfers subject to a $25 minimum. Go to to learn more.