Investing Advice

Coverdell Education Savings Account

Named after former Congressman Paul D. Coverdell, United States Senator from Georgia

Parents or the child can contribute up to $2,000 a year, as long as the parent's adjusted gross income is less than $180,000. If between $180,000 and $220,000 the allowable contribution is less. Single adults with incomes less than $95,000 a year can also take advantage of this tax-free investment to save for their own education.

Money saved in a Coverdell account can be used to pay for tuition at any school, including private elementary and high schools, and for expenses such as uniforms, transportation, computer and software, and extended daycare.

A Coverdell account can be set up with any financial services firm. The person who contributes to the account controls it, deciding how and when the money is spent. If need be, the savings may be transferred to another family member. Note though that the money is considered to be the child's, which may make it harder to qualify for grants and scholarships.

There is an excellent discussion of the advantages and disadvantages of a Coverdell Education Savings Account along with all the rules at www.savingforcollege.com/coverdell/

Other Financing a College Education Topics:

  1. Financing a College Education
  2. Coverdell Education Savings Account
  3. Section 529 Plans
  4. Scholarships
  5. Help from your college's financial aid office

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