My uncle and I have been researching the different education savings opportunities that I have. Even if I don't think that I will use any of these, it's always a good idea to know all the different education saving opportunities that are out there.
Today I learned (well, listened, drooled and smiled) while my uncle explained a bit about the Coverdell Education Savings Account (also referred to as CESA). This is what was formerly known as an Educational IRA.
The Coverdell Education Savings Account is basically a savings account that was created as an incentive to help parents and students save money for the child which can be set up at most financial institutions. It's quite similar to a 529 college savings plan, but comes with many more contribution limits and restrictions. There is a $2000 per child per year contribution limit. In addition, the adjusted gross income of the family must be less than $110,000 (for singles) or less than $220,000 (married filed jointly). In regard to financial aid eligibility, the Coverdell Education Savings Account is classified as the parent's asset. This means that 6% of the account value counts against your kid's financial aid eligibility.
While this doesn't look like it will do as well as the antique investing and then a 529 plan, it was good to get a perspective on another possible saving account for education.