There are numerous educational saving plans that you can opt for to start saving for your kids’ college. Education expenses in colleges are increasing, and it is necessary to choose the best savings plan for your child’s future.

Recently, qualified tuition programs have been widely used by a growing number of families to finance their child’s future. College savings plans are offered by all the federal states, and they are similar to prepaid tuition options. Here, we will be looking at the various types of educational plans that are available and how they can help in saving for your child’s college.

College savings plans allow parents to fund their child’s tuition by contributing a specified account. You can fund your child’s higher education expenses like fees, books, supplies, room, and boarding through this savings plan. Some major college savings plans and their investment options that will be beneficial for your child’s education are discussed here:

1. 529 college savings plan
The 529 plan is a state-sponsored plan that is a great and tax-free way of saving for your child’s college education. 529 plans vary from state to state and differ widely on costs, features of their programs, and the investing options. The basic features of the 529 college savings plan are that the funds can be used only after deducting taxes for your non-qualified withdrawals, but the contribution for the fund grows tax-free. These funds can be used for qualified educational expenses, and deterring from it will attract income tax and penalties.

The contributions of 529 plans are limited by federal and state tax laws, and they vary widely from state to state. So, you should assess the features of this plan, because it will negatively impact how much your child will have when they enter college.

2. Coverdell Education Savings Account (ESA)
This is another account that comes with tax benefits and will greatly help you in saving for your child’s elementary and secondary education as well as for college. These are tax-free contributions, and withdrawals from this account are also tax free. ESA funds have a very less contribution limit, and using it for non-qualified expenses can attract a 10 percent penalty.

3. Prepaid college tuition plans
Prepaid college tuition plans allow you to pay for your child’s college tuition in the current year and lock the prices to prevent a rise later. More than 12 states offer this type of college tuition plans, but quite a few are closed for the time being. Like the 529 plans, any gains you accumulate from these plans are exempt from federal tax.

A child’s education is a very important consideration for every parent, and it is advisable to make a wise decision. A good college savings account will not only help you save but will also help your child to get the maximum benefits of the funds.