If you are looking for a solution to the rising costs of education, whether it's in just a couple of years or 10 plus years from now, The Extension Loan Fund has a reasonable and safe answer: A Coverdell Educational Savings Account.
Although the IRS limits the amount of contribution to and ESA account, You can put up to $2,000 annually into the account each year. A person can contribute to multiple Coverdell ESA funds, but the total contribution limit remains at $2,000.
If a person starts a plan at birth and contributes the max amount each year for a total of 18 years, total contributions would total $36,000.00. Given the Extension Loan Fund's current rate of return on ESA's, this would have an investment maturity value of $57,251.60 and based on the current cost of tuition at a public university, this would cover tuition and then some, even considering inflation.
As a guardian you can set up an account for your child and anyone; grandparents, relatives, friends and even the student beneficiary can contribute to the account.
The best part! The earnings on contributions are never taxed. Unfortunately the contributions themselves are not deductible, but the student beneficiary avoids the capital gains tax and other taxes when withdrawing funds (as long as the money is used for qualified purposes. e.g. tuition, fees, books, limited housing, and school supplies).
The funds can be used for virtually any public, private or religious primary, secondary or post-secondary school tuition, fees, etc.
Contact the Extension Loan Fund to begin an Educational Savings Account (ESA) to support your families' next generation of scholars.