Saving for college can be stressful, but it doesn’t have to be! There are many ways to save up so that you can send your kids off to the university of their dreams. In this article, we’ll go over some popular options for saving money that will help you reach your goal.

There are many options available to help you save for college!

There are many options available to help! Here are some of the best:

  • 529 plans. A 529 Plan is a tax-advantaged investment vehicle that allows people to contribute money for future college expenses. The earnings from these accounts grow tax-free, and withdrawals are not subject to federal or state income taxes if used for qualified higher education expenses. Contributions can be made by anyone, including grandparents and friends, so consider asking them if they would be willing to chip in!
  • Coverdell Education Savings Account (ESA). Like a 529 plan, an ESA allows for tax-free growth and tax free distributions when used for qualified educational expenses (including K12 tuition). However, only those with adjusted gross incomes up to $210k/$250k may contribute on behalf of each beneficiary (instead of just anyone), and the annual contribution limit is much lower—$2000 per year versus $14500 per year with a 529 plan—so this option may not be right for everyone.
  • UGMA/UTMA Custodial Accounts: If your child already has excess cash they need saved now (or even later on down the road), opening an UGMA/UTMA account could prove beneficial. These types of accounts allow parents or other trusted adults who have been given legal authority over the minor’s assets until age 18 (for UGMA) or 21 (for UTMA). While there won’t always be enough time before college costs start piling up; taking advantage of compound interest could help you get closer towards reaching your goal faster than otherwise possible without having done anything differently beforehand.

There are a few more details about each one of these options.

529 plans

529 plans are investment vehicles that allow you to save for future college expenses. They are available in every state and offer a range of tax advantages, depending on your state’s 529 plan rules.  A 529 plan can be used for college, graduate school and even vocational training — not just college. For example, some states allow you to use the money from your 529 account to pay for room and board as well as tuition at public colleges within their own state.  State-sponsored 529 plans also tend to offer low fees because they aren’t subject to a lot of competition like other investment vehicles such as mutual funds or exchange-traded funds (ETFs).

Coverdell Education Savings Account

The Coverdell Education Savings Account (Coverdell ESA) is a tax-advantaged savings account that can be used to pay for qualified education expenses. Contributions to an ESA are not deductible, but investment earnings on contributions grow tax deferred and withdrawals from the account are tax free when made for qualified educational purposes. You can contribute up to $2,000 annually per beneficiary, up until they turn 18 years old. If you have more than one child in college at once and would like to max out your allowance for each, remember that there is no limit on how many ESAs you can open!

UGMA/UTMA Custodial Accounts

UGMA/UTMA Custodial Accounts

The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) provide you with a tax-advantaged way to save in your child’s name. While these accounts are not as advantageous as 529 plans, they do have some advantages:

  • You can use UGMA/UTMA accounts to save up for your own education too. If you want to pay for college yourself, this is one option worth exploring.
  • You don’t have to start saving early; there’s no time limit on when you should fund an account. Unlike 529 plans where the money must be used within a certain timeframe (typically after high school graduation), there is no such requirement when it comes to UGMAs and UTMAs. The only caveat is that once your child reaches adulthood (age 18 or 21 depending on state law), he or she will legally be able to access all of the funds without penalty, so keep this in mind while planning ahead!


There are many ways to save for your child’s education, but the best way is to start early. By putting aside just a small amount each month, you can be sure that when it comes time for college you will have plenty of cash available and won’t have to worry about whether or not your kids will get into their schools of choice.  We are available to help with this major milestone in your life.  Give us a call and we will sit down with you and go over your exact situation.

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding the accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Stephen Pease, David W. Smiley and Matt Hoaglin are Investment Advisor Representatives with Dynamic Wealth Advisors dba Oxford Financial Planners.  All investment advisory services are offered through Dynamic Wealth Advisors.

Join to newsletter.

Get up to date and timely financial emails a few times a month.

Continue Reading

Get a personal consultation.

Call us today at (970) 375-1291

Contact Us

Fiduciaries in Durango, Colorado.