The Pros and Cons of the Coverdell ESA for College

As you’re setting up investment plans for your child’s college, it’s smart to be aware of the pros and cons of the Coverdell ESA for College. This educational savings account is a very attractive savings plan for many people. Let’s take a look at some of the negatives and positives of this program and so you can see if it’s a fit for you.

Pro- The Coverdell Education Savings Account can be self-directed with a wider array of investment products available than a 529 plan. The account can be placed in almost any sort of investment. Typically, stocks, bonds, bank CDs, mutual funds and unit investment trusts. No part of trust assets may be invested in life insurance contracts.

Pro- The Coverdell funds are available to finance elementary and secondary school, not just college. This includes items such as tuition, fees, tutoring, books, supplies, room and board, uniforms, transportation and computers.

Pro- Earnings accumulate tax-free. Qualified distributions are exempt from federal income tax. Please note that contributions are not deductible on federal or state income tax.

Pro- Corporations may contribute. This even includes tax-exempt organizations. Regardless of income level, corporations may contribute to an individuals Coverdell account.

Pro- People can contribute to both a Coverdell account and a section 529 plan in the same year. Note that there may a gift tax implication if you give more that $12,000 per beneficiary.

Con- Contributions to the Coverdell ESA are limited to $2000 per beneficiary per year. Here’s an example, you have a son and a daughter that you want to contribute $3500 into Coverdell accounts for. You deposit $2000 to your son’s account and $1500 into your daughter’s.

Their grandmother wishes to add another $1000 but she is only allowed to put $500 into your daughters account as the $2000 limit has been reached. At $2000 a year, it would be tough to have this be your entire college savings plan.

Con- Contributions can only be made until the beneficiary reaches age 18. This may be a non-issue with some families but a 529 plan would allow you greater flexibility. There are no age restrictions for special needs beneficiaries.

Con- The money must be used by the time the child reaches the age of 30. If the funds are not used, the earnings will be taxed as ordinary income plus a 10% penalty.

Con- There is less flexibility in changing beneficiaries in a Coverdell ESA. Coverdell plans are considered permanent gifts. You cannot open up an account for your child and take back the money for your own use. Typically, the parents are responsible for the account until the child reaches 18. Then, the beneficiary usually takes control of the account. There is some ability to change beneficiaries.

Con- The Coverdell ESA is not eligible for the state tax deductions available for some 529 plans. The available 529 state tax deductions vary from state to state. Of course, a tax deduction is not the only reason to select an investment.

Con- The contribution limit is phased out for contributors with an adjusted gross income between $95,000 and $110,000 for single people and between $190,000 and $220, 000 for joint filers. A clever way around this con if you’re in this income bracket is to give the money to your child and let her open a Coverdell for herself.

After looking at the pros and cons of the Coverdell education savings fund, you can see if this is a wise investment for your child. The items that have been identified as cons are non-issues for many people. Coverdell is a good investment overall for most families. Talk with your tax profession and see if it’s right for you.

Why In-State Colleges Should Be a Financial Aid Solution

Are you looking for a viable way to pay for college, but most of your college options seem like they will only put you years in debt? Is it really worth to pay for thousands of dollars in tuition each year? How can you avoid the stress of an expensive college education?

For those seeking a high quality education that will help them stay out of debt, an in state college could just be the ticket. Here are a few reasons why you’re in state college or university is worth its weight in gold.

Your In State College – Your Financial Aid Solution

How can your in state college become your financial aid solution? Easy. Attending an out of state college automatically adds thousands of dollars to your financial aid template.

Why not save yourself the stress of footing such a large bill and look for a good in state college or university? Most states have at least one or two good state colleges to choose from. Going to an in state college does not mean that you will have to sacrifice the freedom of the college experience.

Chances are you will have to make some kind of a move, even if it means moving only forty minutes away from your hometown, or on the other hand, it could possibly mean you will be moving hours away. Whatever you choose, know that an in state college will help you save thousands over the years.

Why Are In State Colleges the Affordable Choice for Students?

Choosing an in state college can be a great financial aid solution because it means that you qualify for in state tuition. This means that because you have already established residency, you will not have to pay the out of state tuition, which is often several thousand dollars more.

Moreover, in state tuitions often offer many tuition waivers to incoming students who hail from in state. If you have made above average grades throughout high school, there is a good chance that you will qualify for some sort of in state tuition assistance.

Even if this is not the case, you may consider using your local community college system as a springboard to a local in state college or university. Most community colleges also offer tuition scholarships for students wishing to transfer to an institution of higher education.

Get More Out of Your Financial Aid by Attending an In State College

Chances are that you will get more out of your federal aid if you choose an in state institution of higher learning rather than an out of state choice. You have more local resources at your disposal if you are applying for an in state institution.

In State Colleges - Offering You a Great Education without Breaking the Bank

The dirty secret about elite private institutions of higher learning is, in most cases, you can get the same quality education for a fourth of what they charge each year in tuition. Many in state colleges are highly ranked institutions of higher learning.

Recent analysts have pointed out that costs to attend many highly ranked elite private colleges and institutions have ballooned, making it even more difficult to finance a four year degree.

Along with tuition rates, the number of applicants has made it even more competitive to be accepted to these institutions. With more people applying and tuition rates climbing, securing a good financial aid package at an expensive, elite private college or university was never such a challenge.

Moreover, researchers have pointed out that a fine college education can be had at many public state colleges and institutions. In effect, in most cases you will simply be paying for ‘bragging rights’ rather than a worthier or inherently more valuable college degree.

Federal PLUS Program Smart Move for College Funding

Under the Parents PLUS loan program, parents are able to help pay their child’s education expenses. The student must be a dependent undergraduate who is enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D.

Ford Federal Direct Loan (Direct Loan) Program. Parents can get either of these loans, but cannot get both, during the same enrollment period. An acceptable credit history is a must. It is simple to apply for the Direct PLUS Loan. The student’s parent must complete a Direct PLUS Loan application and promissory note, contained in a single form that is available at any college’s financial aid office.

For the FFEL PLUS Loan, the parent has to fill out and send in the PLUS Loan application, available from the school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

A credit check will is always required, and must be passed. If the credit check is not acceptable, the parent may still be able to receive a loan if they can provide proof of a hardship, or if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if the parent fails to do so.

The parent might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. The student and parent must also meet other general eligibility requirements for federal student financial aid. The yearly limit on a PLUS Loan is equal to the cost of attendance minus any other financial aid the student receives.

After approval, either the U.S. Department of Education (for a Direct PLUS Loan) or the parents’ lender (for a FFEL PLUS Loan) will send the loan funds to the college. The school might require the parent to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount.

The funds will first be applied to the tuition, fees, room and board, and other school charges. If any loan funds remain, the parent will receive the amount as a check or in cash, unless they authorize the amount to be released to the student or to be put into the school account. Any remaining loan funds must be used for education expenses.

Federal PLUS Loans are unsubsidized loans made to parents. If the student is independent or the parents cannot get a PLUS loan, the student is eligible to borrow additional Stafford Loan funds. The interest rate for the PLUS loan is variable, but never exceeds 9 percent.

Interest rates are adjusted each year on July 1 and the parent is notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. There is also a small fee charged in order to obtain the PLUS loan, which is up to 4 percent of the loan.

Repayment of the PLUS loan generally begins within 60 days after the loan is fully disbursed. There is no grace period for these loans. This means interest begins to accumulate at the time the first disbursement is made. The parent must begin repaying both principal and interest while the student is in school. There are some tax incentives available for paying back these loans.

The Scoop on Pell Grants for College Education

Paying for a college education – it’s a thought that keeps many parents up at night. After all, everyone knows that having a college education is the entrance into many good jobs and careers, and everyone also knows that the cost of getting a college education seems to be constantly increasing.

A college education can be more expensive than buying a home for some people and the cost of attending a college or university is prohibitive to some families, even though they know that giving their children the opportunity to get a college education would give their kids a leg up on the competition in the job market. The cost becomes even more overwhelming for parents who have more than one child headed to college.

There are plenty of savings plans available to families to put a little aside for their children’s college education while the kids are still in elementary school and high school, but what happens if you don’t have any money left over to put aside into a savings plan at the end of each month, or what happens if you simply didn’t save anything at all, and now the senior year of high school is upon you? Does that mean that all hope is lost?

The good news is that there are ways for students who come from families without the resources to send them to college to get a good college education anyway. The Federal Pell Grant scheme is one such program. Federal Pell Grants differ from other funding opportunities for students because they do not need to be paid back.

These grants are cash payments from the government to students who need them to pay for college, and that is the end of the story. The student does not have to work on campus to get this money and they do not have to pass a credit check, nor do their parents. Federal Pell Grants have helped millions of low income families give their children a college education.

To qualify for a Federal Pell Grant, you first have to prove that you really need one. The government will make a decision based largely on the income of the parents, but they will also consider factors like how much the school costs to attend, how many classes the student will be taking, and how long they plan to be in school.

These factors will determine not only who gets a grant but also how much money each person will get. Federal Pell Grants are distributed through the student financial aid office at each school.

Federal Pell Grants certainly have helped a tremendous number of students get an education, and they can truly be a lifesaver for a family in need, but don’t make the mistake of thinking that they can solve all of your problems. In many cases, the amount of the Pell Grant, which is awarded yearly, is much less than even tuition at the school, let alone additional costs like room, board, and books.

Some people also complain that the need based criteria of the loan is too strict and it excludes working class families who can’t afford the tuition but still make a living for themselves. Also, the system can punish a student who finds work while in school – the increased income of the student may put them out of the Pell Grant bracket.

For all of these reasons, when you’re planning your education financing, you should count on using Pell Grants only as a supplement. You should also consider work study programs at your school, federal subsidized student loans, and student loans from private sources.

Viability of US Savings Bonds to Fund College

Saving for college has become a priority for many American families. With most university tuition rates climbing every year at record pace, it can seem nearly impossible to send your children to a good college or university without going into deep debt. But it doesn’t have to be that way. With a little planning, you can make your college savings plan go a long way.

Using a US Savings Bond to Save for College

Many parents with young children wonder if it is viable to use US savings bonds as a savings vehicle for their children’s future education. The truth is that a US savings bond can be a great way to save for college for many families.

Most US savings bonds offer competitive interest rates, and they come with the added security of being backed by both federal and state governments, as well as being subject to certain income tax benefits from both levels of government. Here is some information about saving bonds and what they can do to help you save money for your child’s college education.

The Series EE Savings Bond

One of the most popular US savings bond vehicles that are purchased by parents who are looking to save money for their children’s college education is a US savings bond from the series EE savings bond series. Analysts have recently estimated that a US savings bond from the series EE that was purchased in 2006 will likely earn 3.2 fixed interest rate percentages over the life of that bond.

The Series I Savings Bond – AKA the I Bond

What about the series I savings bond? It is also commonly known as the I bond. What is the difference between the series I savings bond and a series EE US savings bond? The main difference is that the series I savings bond carries an interest rate that is determined by the federal government.

In general, the federal government determines the interest rate for the series I savings bond by determining a basic low fixed rate, as of now that is one percent, and then adding on an inflation rate to that that reflects the latest increases in the consumer price index.

How to Make Your Money Grow with a US Savings Bond

Regardless of whether you choose an I US savings bond or a Series EE savings bond, here are some basic things you should know about how to make your money grow. First, you should always wait at least one year before cashing in your US savings bond.

You should also know that in most cases you will forfeit at least three months interest if you decide to cash in your US savings bond within five years of your initial investment date.

Tax Incentives of US Savings Bonds

In most cases, you will find that your US savings bond comes with many attractive tax benefits. For interest, you will not have to pay taxes on your interest on your state tax form, and in many cases, your interest may also be free from federal taxes.

Why a US Savings Bond May Be a Better Option than a 529 Investment

In most cases, analysts predict that a US savings bond will tend to perform better than many 529 college savings investment plans. However, this strictly depends on what kind of 529 college savings investment vehicle you have chosen.

Some state 529 college savings plans will indeed outperform a US savings bond over the long haul. Much of this depends on the condition of the market in future years, inflation trends, and a number of other fluctuating conditions.

Your College Loan Options for the Future

Heading off to college the first time is scary for anybody looking at the price for your college education may even scare you more. The good news is that there are many ways you can find your college education if you are willing to do your research and take the time to fill out the necessary applications.

Even if you have not saved for your college education for years, you can still go to college and find a loan that will help you get through the next few years. Here is a look at your college loan options for the future.

The Perkins Loan: If you have done your research on college loans you have probably heard of the Perkins loan. This alone is also called the Formerly National Defense Student Loan, the Perkins Loan Program and the National Direct Student Loan.

This alone is based on need and can provide you with a low interest loan to help you finance your college education. In addition, if you qualify for a Perkins loan over 1800 participating colleges will take the Perkins loan. This gives you plenty of opportunity to find a college that fits your needs.

If you are interested in taking out a needs-based college education among such as the Perkins loan, then you need to make sure that you qualify, you can do this by going online in learning more about this particular loan or speaking to your college education counselor about this loan.

Federal GRAD Plus Loan: This loan is for graduate students need financing for their graduate school. This one is also a needs-based loan and offers a low interest repayment after you have graduated. In order to qualify for this loan, you must be a citizen of the United States or an eligible noncitizen.

You also must be a student in a graduate or professional program and enrolled at least half of the time. Currently this loan has a fixed interest rate of 8.5%. The amount of money you will get when you apply for this loan will depend on your need and may vary from student to student.

You should also remember that when you take out the loan. You will not be responsible for repayment while you are in school. However it does accrue interest, while you are in school. You will be responsible for the total amount plus interest while you are repaying your loan after you have graduated.

Subsidized Stafford Loan: this loan is available to United States citizens or eligible noncitizen who are enrolled in a college program or professional program at least half of the time. The amount of loan that you will receive will depend on your financial needs.

Not everybody can qualify for this type of loan. The amount of money that you will receive with this loan is $3500 for the first year, $4500 for the second year, and for your third through fifth year in school, you can get $5500 each year.

If you are a graduate student and you qualify for this loan, you can get $8500. The interest rate on this loan is currently fixed at 6.8%. In addition, it is important to remember that your repayment schedule began six months after you graduate or, if your school enrollment drops below half-time.

You do have up to 10 years to repay this loan and extensions are granted in certain situations. There are a variety of ways to pay back this type of school loan. So you should check with your loan officer or the Internet for information about this very popular college education loan.

Pros and Cons of Pre-paid Tuition vs. 529 College Saving Plan

There are so many ways for concerned parents to plan for their children’s future educational expenses. There are federal and state educational tax credits, savings bonds, savings accounts, and now, states 529 college savings incentives programs. These state 529 college savings incentives programs are relatively new, and many parents do not know whether they are suited for their financial needs.

We investigate the nature of these state 529 college savings incentives programs and what you can expect from the different types of state 529 college savings incentives programs.

Pre-paid Tuition vs. 529 College Savings Plans – Two Sides of the Same Coin

Many parents find themselves trying to decide between investing in either a pre-paid tuition program or a state 529 college savings incentives programs. The truth is that both of these represent two sides of the same coin. In truth, both of these types of plans are officially known as ‘section 529’ plans because they are both described under the same tax code and are subject to many of the same benefits. Even so, they are different and are often subject to different restrictions and benefits.

What’s All the Fuss with State Pre-Paid Tuition Plans? Pros Offer Peace of Mind

Again, a state pre-paid tuition plan is just another kind of a state 529 college savings incentives program. When it comes to a state pre-paid tuition plan, here is the basic gist of it. A state pre-paid tuition program, as the name implies, allows you to pay for your child’s tuition rates right now.

That means that you can, in essence, ‘lock in’ the current tuition rate. That way you will not be subject to the rising costs of tuition rates. This is a concern for many parents, who watch the current trend of rising tuition costs every year in despair.

Pre-paid Cons - Restrictions Abound with Pre-Paid Tuition Plans

Pre-paid tuition plans can come with associated restrictions, so make sure you understand them before you enroll. First, there is generally a firm age limit on state pre-paid tuition plans. Most state pre-paid tuition plans have a broad age limit that usually ranges from the time your child is a newborn to the time they are a senior in high school, but make sure to note the age limit when you are considering plans.

Also, there often restrictions on when you can enroll in your state’s pre-paid tuition plan. These pre-paid plans usually have special enrollment periods that mirror the enrollment period for insurance plans and the like.

Consult your state’s web site if you are not sure when to enroll. Furthermore, most state pre-paid tuition plans have restrictions on the types of expenses that they will cover. In most cases, state pre-paid investment plans will cover just that –state tuition and mandatory associated fees.

Considering a Traditional 529 Savings Plan? Pros You Can Live With

What about state 529 college savings incentives programs? Like most pre-paid college tuition programs, a state program allows you access too many federal tax incentives, including tax-free withdrawals, HOPE and Lifetime Learning tax credits, and other favorable federal tax credits. In general, a state 529 college savings incentives program allows you maximum flexibility. Most allow year-round enrollment and do not carry age limits.

Keeping Up With Inflation – Cons of the Traditional 529 Savings Plans

There are some cons associated with many state 529 college savings incentives programs. Some argue that while saving for college is good, some 529 savings plans may not be able to keep up with the growing trend of tuition increases. Like any type of investment, state 529 college savings incentives programs may simply lose their value over time.

How Federal Work Study Programs Come into Play for College Funding

Many people going to college simply cannot afford the tuition. That is a known fact and many parents worry about how they will fund their child's college tuition and education. If you are looking in to ways to fund your college education, you have several options. There are many different types of low interest loans that you can take out, some of which are based on financial needs, while others are not.

You can also look into scholarship programs. However, many of these scholarships are very competitive and hard to come by. Another option that you have when you need to get college funding is the federal work study program. Here is some more information about how Federal work study programs can help you pay for your college education.

You may not know a lot about the federal work study programs. However, they are a great way that you can sign your college education. The federal work study program gives funds to students that can work as part-time employees at a college or university is can help you finance the costs of your college education.

In addition, many colleges and professional programs participate in the federal work study programs. There are over 3400 participating colleges and postsecondary institutions, where you can receive federal work study assistance.

When you participate in the federal work study program. Your hourly wages will not be less than the minimum wage.  The one thing to remember when looking at the federal work study program. Is that you must qualify to receive this type of help in finding your college education.

In order to determine if you qualify for this type of funding, you will be required to fill out applications that will determine your families expected contribution to your college education and your very own income as a student. If you are independent from your family than they will also look at your assets as an individual.

Furthermore, if you are dependent on your family, the application will also look at your household size and the number of people in your household attending college or postsecondary education programs. It seems like a lot, in order to qualify for the federal work study program. But this is certainly an option for many students who find that they are short when it comes to attending college.

Another great aspect of the qualifying for the federal work study program is that in many cases. You can find employment on camp this while you attend school. These jobs are generally well suited for students and can work around your course curriculum schedule. In addition, if you have declared a major or interest in a certain field of study, you can often find work study related jobs for your particular interests.

For example, if you are majoring in English, you may be able to find a work-study job working in the English department as an assistant for helping other students with their schoolwork. This is a perfect way to gain valuable work related experience or you are still attending college. It looks good on your resume and can give you experience that you need.

If you are interested in seeing if you qualify for the federal work study program, then you should speak to your counselor or financial aid officer at your university or college. You can also find a great deal of information about this particular program on the Internet. Going to college can be a little less scary when you know how you will find your education. Check into the work study program at your local university today.

Important Steps to Take when Saving for College

It’s time to look at some important steps to take when saving for college. The time to save is right now. It’s never too late to state a plan. Consider these tips for education savings.

Step 1. Start early. The sooner you start saving, the less you’ll need to save each year to reach your goal. The day your child arrives is not too soon to begin saving! You can take advantage of investments that promise greater returns. You can take advantage of volatile investments that are too risky for short-term college savings.

Step 2. Set up a budget. You should make a savings goal. Look at the Internet for a college cost calculator to get a rough idea of what you need to save. Then figure out how much you can put away each month to reach this goal.

Step 3. Save regularly. Get into the habit of investing a set amount of money monthly. This will set the habit of education future planning. Not a good saver? Have an automatic payroll deduction made or an automatic deposit withdrawn. This way the money is out of your checking account before you can use it.

Step 4. Use professional assistance. That’s what they’re there for. Unless you are a financial wizard yourself, talk with an experienced accountant, financial advisor or lawyer. Ask what they are doing for their children. It helps to know that your advisor can personally relate to your college savings strategy.

Step 5. Think about a 529 plan. Even if you haven’t started saving as early as you had planned a 529 plan or even a Coverdell ESA are still useful. The 529 plans offer many tax advantages. Your money will actually grow in a tax-deferred style and if your withdrawals are qualified, they will be exempt from federal income tax. Many states even give tax deductions from state income tax. Check with your state’s 529 provider for more details.

Step 6. Save in the parent or guardian’s name, not the child’s. This minimizes the impact of the fund on need-based financial aid. Also, this will prevent an irresponsible child from using their education savings fund or 529 for non-qualified purchases.

Step 7. Diversify your investments. For example it is better to invest in mutual funds than just stocks. Mutual funds spread out the risk over many stocks, which can prevent the drop in value of one stock from ruining the value of your whole portfolio. Or invest in both stocks and bonds. A good plan would be to have a mix of high and low risk investments.

An age-based 529 savings plan is a simple way to balance your portfolio. Younger children have a higher percentage of high-risk investments than older children. As children are just a few years from college, an age-based 529 plan would have almost all funds invested in low risk investments.

Step 8. Be flexible. A great new college program may be available just a few short years from now. Tax laws will change and your income circumstances may change, too. Review the steps you’re taking from time to time and be willing to make adjustments.

If you find that the assumptions behind your investment plan are not correct or your tolerance for risk has changed, you may need to change your investments. Don’t sell an investment just because the market is low; sell because of how the investment is predicted to do in the future.

There are so many important steps to take when saving for college. Any money you are able to tuck away today makes the road to college that much smoother for your child.

What’s Up with 529 College Plans in Texas?

States' 529 college savings incentives plans have become the newest way for families to save money for their children's future higher learning educational expenses. In Texas, there are two popular sections 529 college savings incentive plans that can help you save for the education your children deserve.

What Are the Two 529 Savings Incentive Plans in Texas?

The 529 savings incentive plans in Texas are known as Texas Tomorrow Funds. Separately, there are two funds: the Texas Tomorrow's College Investment Plan and the Texas Guaranteed Tuition Plan. Here is a brief overview of each plan so you can decide which one would work best for your family. But remember, you can also choose to invest in both plans if you so wish.

The Texas Tomorrow's College Investment Plan

This plan is managed by the Enterprise Capital Management group. The basic purpose of this 529 savings incentive plan is to provide a safe and secure tax-benefited investment vehicle for families who want to save for college. The Texas Tomorrow College Investment plan offers great flexibility, with a choice of over 20 different investment portfolios to choose from.

The Texas Tomorrow's College Investment plan allows your money to grow in a tax-free environment. It also allows for tax-free withdrawals when you are withdrawing earnings to be used for qualified education expenses.

What Expenses Are Covered by the Texas Tomorrow College Investment Plan?

The Texas Tomorrow's College Investment Plan covers all the basic higher education-related expenses, including tuition and mandatory fees, expenses related to room and board, textbooks and supplies, and some transportation costs. The Texas Tomorrow College Investment plan is very accessible, with easy year-round enrollment available. There are no age limits on this plan.

What Tax Benefits are Associated with the Texas Tomorrow College Investment Plan?

There are many tax benefits associated with this plan, including many federal tax benefits. Federal tax benefits for this plan include tax-free earnings, access to HOPE and Lifetime Learning tax benefits, as well as access to other favorable federal tax estate and some gift benefits.

Your Other Texas 529 Option The Texas Guaranteed Tuition Plan

The other section 529 plan available in the state of Texas is the Guaranteed Tuition Plan. The Guaranteed Tuition Plan helps families lock in the cost of a higher education today. It is a basically a prepaid plan where you can pay for your children's future college expenses at today's cost.

The plan allows you to use the benefits at any accredited institution of higher learning in the United States. The benefits of the Guaranteed Tuition Plan are protected under constitutional guarantee by the State of Texas. In most cases, earned distributions on the Guaranteed Tuition Plan are tax-free when they are used for most kinds of educational expenses.

What Expenses Does the Guaranteed Tuition Plan Cover? What about Tax Benefits?

The Guaranteed Tuition Plan covers only the basic expenses, which includes tuition and any mandatory fees. As for tax benefits, the Guaranteed Tuition Plan offers the same federal tax benefits as the Texas Tomorrow's College Investment Plan, which include tax-free earnings, access to the HOPE credit and Lifetime Learning credit, and other favorable federal tax credits.

What Are the Restrictions of the Guaranteed Tuition Plan?

There are certain restrictions on the Guaranteed Tuition Plan. For instance, the Guaranteed Tuition Plan has an age limit, available only for those newborn to 12th grade. Another restriction on the Guaranteed Tuition Plan is that it is not available for year-round investment.

Check the State of Texas web site for dates on when to enroll in the Guaranteed Tuition Plan. Also, to open a Guaranteed Tuition Plan account, you must be a citizen of the State of Texas.

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