Let Us Help You Explore College Savings Plans
You face challenges that your parents didn't: soaring tuition costs and an array of funding options. With an education savings plan from State Farm®, you can get your student started on the path to higher learning.
Coverdell Education Savings Account (ESA)
Save for Kindergarten through grad school
Importance of Saving & Creating an Education Savings Plan
- College costs keep rising. In 2016-2017, tuition and fees for in-state students at public, 4-year colleges and universities increased 2.4%. This followed an increase of 2.9% in 2015-2016.1
- 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.
Let's Compare Plans
FDIC Insured Bank Education Savings Plan Options
| Coverdell ESA | Custodial Account (UTMA) | |
|---|---|---|
| The account is designed to ... | 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 tax free if used for qualified higher education expenses and qualified elementary and secondary education expenses. | All or a portion of the investment income may be eligible to be taxed at the child's tax rate. For 2017, investment income in excess of $2,100 may be taxed at the parents' tax rate instead of the child's tax rate. |
| Contribution limits | $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). |
| Account controlled by | Adult until student reaches age of majority (18)*, but adult may opt to maintain control. | Adult until student reaches age of majority (21)*. |
| Restrictions on how old the student is when contributions are made | ||
| Income restrictions | ||
| Funds must be used for education to avoid taxation and penalty | ||
| Student/beneficiary can be changed | ||
| Low impact on financial aid** | ||
| Ready to learn more? | Coverdell ESA | Custodial Account |
*This account will be governed and administered in accordance with Illinois law to the extent not preempted by Federal law.
**Neither State Farm nor its agents provide tax or legal advice.
Mutual Fund Options
| 529 College Savings Plan | Coverdell ESA | Custodial Account
(UGMA/UTMA) |
|
|---|---|---|---|
| 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. | All or a portion of the investment income may be eligible to be taxed at the child's tax rate. For 2017, investment income in excess of $2,100 may be taxed at the parents' tax rate instead of the child's 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). |
| Account controlled by | Adult | Adult until student reaches age of majority, but adult may opt to maintain control. | Adult until student reaches age of majority. |
| Restrictions on how old the student is when contributions are made | |||
| Income restrictions | |||
| Funds must be used for education to avoid taxation and penalty | |||
| Student/beneficiary can be changed | |||
| Low impact on financial aid | |||
| Ready to learn more? | 529 College Savings Plans | Coverdell ESA | Custodial Account (UGMA/UTMA) |
1The College Board, Trends in Higher Education, Average Published Undergraduate Charges by Sector, 2016-2017
2fool.com, May 8, 2016
Securities issued by State Farm VP Management Corp. For more information, call 1-800-321-7520.
Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal. State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products.
Ni State Farm ni sus agentes proporcionan asesoría fiscal o legal.
State Farm Bank, F.S.B., Bloomington, Illinois ("Banco"), es un Member FDIC y un Equal Housing Lender. NMLS ID 139716. Los otros productos que ofrecen las compañías afiliadas de State Farm Bank no están asegurados por la FDIC, ni constituyen una obligación de State Farm Bank, ni están garantizados por State Farm Bank y podrían estar sujetos a riesgos de inversión, incluyendo la posible pérdida del principal invertido. El Banco anima a todo individuo interesado a presentar una solicitud para obtener cualquier producto ofrecido por el Banco. También lo animamos a que obtenga información relacionada con las normas de suscripción del Banco para cada tipo de crédito o servicio ofrecido, visitando statefarm.com® o contactando al Banco por medio del 877-SF4-BANK (1-877-734-2265). Si usted es sordo, tiene dificultades auditivas o no se comunica verbalmente, puede comunicarse con nosotros a través del 711 u otros servicios de retransmisión. Para solicitar un producto del Banco, también puede ver a su agente participante de State Farm.
AP2017/04/0243