Education Funding
You and your children’s earning potential can dramatically increase with your level of education. In fact, according to the Bureau of Labor Statistics, someone with a bachelor’s degree earns an average of $20,000 a year more than a high school graduate.1
That’s one reason saving for college is important, but there are other factors to consider as well:
- More career opportunities
- Greater chances for advancement
- Improved employee benefits
For an overview of student aid, how to cut costs, scholarship tips, funding options and more, read A Crash Course in Education Funding.
The costs
The average annual cost of tuition, room and board for the 2012-2013 school year for public and private college were2:
Type of school | Average annual cost | Increase over prior year |
4-year in-state public university | $17,860 | 4.2% |
4-year private university | $39,518 | 4.1% |
2-year public college | $3,131* | 5.8% |
*Tuition and fees only.
With inflation growing at approximately 3 percent a year3, it’s obvious that college expenses are increasing at a much faster pace than the cost of living.
Paying for college
Education funding cheat sheet
Following are some ways that COUNTRY Financial® can help you start saving (2013 information):
| Coverdell Education Savings Account | 529 Savings Plan | Roth IRA | Uniform Gifts / Transfers to Minors Act (UGMA/UTMA) |
Use of funds | Qualified elementary, secondary, and/or higher education expenses. Assets must be used by age 30 to avoid taxes and penalties | Qualified higher education expenses | Contributions can be withdrawn at any time without tax or penalty. Earnings are taxed, but not penalized. | Anything benefiting the child |
Contribution limits | $2,000 per year per child. Contributions exempt from gift taxes
| Varies by state, but total contributions are typically over $200,000 per beneficiary. Contributions up to $13,000 per year ($26,000 for joint filers) exempt from gift taxes. | $5,500 per year per person, plus $1,000 catch-up contribution if age 50 or older. Contributions can be made as long as account owner has income. | Unlimited, but can contribute $13,000 per year per child ($26,000 for joint filers) without paying gift tax. |
Income limits | No contribution allowed if MAGI exceeds $110,000 ($220,000 for joint filers) | No limit | No contribution if MAGI exceeds $127,000 ($188,000 for joint filers) | No limit |
Taxes | Contributions are not tax deductible. Federal tax-free earnings and withdrawals for qualified expenses. | Some states allow tax deductions. Federal tax-free earnings and withdrawals for qualified expenses. | Contributions are made on after-tax basis. No tax on earnings for qualified distributions. | No tax deduction allowed. Taxes may be paid at the child’s rate up to certain limits. Taxes are at the parents’ rate thereafter. Gains may be taxed at capital gains rate. |
Account control | Generally, assets become the child’s property at age 18. | Generally, control of the assets remains with the account owner. | The account holder maintains control of the assets. | Generally, assets become the child’s property at age 18 or 21 (depending on state). |
Investment options | Selected mutual funds. Changes made at owner’s discretion. | Selected mutual funds. Investments can be changed once annually | Any investment allowed by law. Changes made at owner’s discretion. | Any investment. Changes made at owner’s discretion. |
College Choice | No restrictions | No restrictions | No restrictions | No restrictions |
Beneficiaries | Can be changed to another family member | Can be changed to another family member | Can be changed | Cannot be changed |
Educate yourself even more about the education funding options available from COUNTRY or find a COUNTRY Financial representative near you to get personalized assistance.
Education funding options
1Bureau of Labor Statistics 
. (2012). "Education Pays"2The College Board , “Trends in College Pricing,” 2012.
3Consumer Price Index , 2011
For more information about mutual funds, including charges and expenses, obtain a prospectus from your registered representative. Read it carefully before you invest or forward funds. There are investment risks associated with investing in mutual funds which should be considered carefully before making an investment.
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer’s official statement. The official statement should be read carefully before investing.
The information contained herein is general and should not be considered legal or tax advice. Laws of particular state and your particular situation may significantly affect the general information presented herein. The availability of the tax or other benefits mentioned above may be conditioned on meeting certain requirements. State tax deductions mentioned here may only be available if you invest in a 529 plan offered by the state in which you reside. You should consult your attorney or tax advisor regarding your specific legal or tax situation.
Securities Products offered through COUNTRY Capital Management Company, 1705 N Towanda Avenue, PO Box 2222, Bloomington, IL. Member FINRA /SIPC
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