College Savings Plans Can Be Confusing. Let Us Help.
You face challenges that your parents didn't: soaring tuition costs and an array of funding options. Your State Farm® agent can help. With an education savings plan from State Farm, you can get your student started on the path to higher learning. Contact an agent to learn more or open an education savings plan.
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529 College Savings Plans
For most colleges nationwide
Coverdell Education Savings Account (ESA)
Save for Kindergarten through grad school
Custodial Accounts (UGMA/UTMA)
Give the gift of college
Importance of Saving & Creating an Education Savings Plan
- College costs keep rising. In 2014-2015, tuition and fees for in-state students at public, 4-year colleges and universities increased 2.9%. This followed an increase of 2.8% in 2013-2014. 1
- Every dollar saved is one less dollar borrowed. Student loan debt is now higher than both credit card and auto loan debt, and second only to mortgage loan debt. 2 Plan ahead to help your student graduate without overwhelming debt.
- It's never too early to start saving for education. With regular contributions into the right plan, and the benefit of both compound interest and potential tax advantages, even modest amounts can grow significantly over time.
Why State Farm?
Let's Compare Plans
|529 College Savings Plan||Coverdell ESA|
|The account is designed to ...||Pay for higher education expenses – college, graduate school, vocational school, etc.||Pay for education – from K-12 to college, graduate school, vocational school, etc.||Enable gifting after-tax dollars to a child without establishing a trust|
|Tax advantages||Tax-deferred growth and withdrawals are free from federal (and possibly state) income tax if used for qualified higher education expenses||Tax-deferred growth and withdrawals are tax free if used for qualified higher education expenses and qualified elementary and secondary education expenses||Each year, the first $1,000 of earnings is tax free. The next $1,000 is taxed at the child's federal tax rate. Earnings in excess of $2,000 are taxed at the parents' presumably higher tax rate|
|Contribution limits||Varies by plan, but many plans allow in excess of $300,000 over the life of the plan||$2,000 per year/per child||No limit on contributions, but gift taxes may apply on contributions over $14,000 per year ($28,000 per couple)|
|Funded with investments (mutual funds)||Checked||Checked||Checked|
|Funded with FDIC-insured bank products (CDs, savings account, etc.)||Checked||Checked|
|Owned by a responsible adult||Checked||Checked|
|Owned by the student||Checked||Checked|
|Restrictions on how old the student is when contributions are made||Checked||Checked|
|Funds must be used for education||Checked||Checked|
|Student/beneficiary can be changed||Checked||Checked|
|Low impact on financial aid||Checked||Checked|
|High impact on financial aid||Checked|
|Ready to learn more?||529 College Savings Plans||Coverdell ESA||Custodial Accounts (UGMA/UTMA)|
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1The College Board, Trends in Higher Education, Average Published Undergraduate Charges by Sector, 2014-2013
2NYDailynews.com, May 17, 2014
State Farm Bank®, Bloomington, Illinois, is a Member FDIC and Equal Housing Lender. NMLS ID 139716. The other products offered by affiliate companies of State Farm Bank are not FDIC insured, not a State Farm Bank obligation or guaranteed by State Farm Bank, and subject to investment risk, including possible loss of principal invested. Contact State Farm Bank toll-free at 877-SF4-BANK (877-734-2265). Callers who are hearing or speech impaired should dial 711 or use a preferred Telecommunications Relay Service.