Compare your education savings options

Parents who want to keep control of the account and save money for their child’s college, qualified postsecondary professional credentialing expenses and/or certain K-12 expenses can take advantage of federal and possible state tax benefits. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

Parents who want to save money for their child’s education and expenses from kindergarten through college can take advantage of federal tax benefits. Generally, the funds must be used for qualified education expenses by the time the child is 30.

Parents who don’t want to be limited to saving for education can take advantage of a lower tax rate on a portion of the earnings and allow their child to take control of the funds once he or she reaches adulthood.

Virginia residents may take a state income tax deduction for CollegeAmerica contributions. Rules differ for residents of other states. Talk to your tax advisor about your specific situation.

No

No

No

No

There is a limited tax benefit under the parents' tax rate.
An initial amount of UGMA/UTMA earnings remain untaxed or taxed at a very low rate, but all remaining earnings are taxed at the parents’ highest marginal rate.

No

No

Yes

Yes, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states.

Yes, taxable and possible 10% penalty.

Yes, at usual tax rate.

No

Yes, your ability to contribute is phased out as your adjusted gross income increases.

No

There's no annual limit on contributions. However, once the total account value (including any earnings) reaches $550,000, no additional contributions can be made.

The maximum annual contribution is $2,000 per year per beneficiary from all sources.

No

Yes. Qualified withdrawals also include expenses for fees, books, supplies and equipment required for the participation of a designated beneficiary in certain apprenticeship programs and amounts used to repay (up to a $10,000 lifetime maximum) a qualified student loan of a designated beneficiary or the designated beneficiary's sibling.

Effective for distributions after July 4, 2025, qualified education expenses were expanded to include a wide range of postsecondary (post-high school) credentialing expenses not offered by traditional colleges or universities. Covered expenses include, but are not limited to:
     • Tuition, fees, books, supplies and equipment required for the enrollment or attendance of the beneficiary in a recognized postsecondary credential program
     • Testing fees and continuing education costs required to earn or maintain a recognized postsecondary credential

Yes

N/A — this account is not education-specific.

Yes. Up to $10,000 (increasing to $20,000 beginning January 1, 2026) can be spent during the taxable year per beneficiary. Qualified expenses include tuition for an elementary or secondary private or religious school (kindergarten through 12th grade), textbooks and workbooks, dual-enrollment fees for college-level courses taken during high school, tutoring services that meet certain eligibility requirements, certain standardized testing fees (e.g., SAT, ACT, advanced placement exam), online education materials and educational therapies for students with disabilities. (Not all states consider this use of assets as qualified expenses; state tax treatment varies.)

Yes

N/A — this account is not education-specific.

Limited, depending on who is the owner of the account.
Money in a 529 savings plan that is owned by the parent is considered a parental asset and is factored into the Expected Family Contribution (EFC) determination at a lower percentage. Up to 5.64% of this savings is counted against financial aid, which can make qualifying for financial aid easier.

Limited, depending on who is the owner of the account.
If the money in a Coverdell ESA is owned by a parent, then up to 5.64% of the account value is counted against financial aid.

Significant. Money in an UGMA or UTMA is considered an asset of the student and is factored into the EFC determination at a higher percentage. This designation can work against your family when your child applies for financial aid.

Account owner (often a parent or grandparent) maintains control.

The recipient may assume control at age of majority in their state of residence (18 or 21 years old in most states).

Beneficiary gains control at the age of majority, usually 18 or 21, depending on state.

No, it can be opened for a person of any age.

Yes, when the account is established, the beneficiary must be under age 18 or a special needs beneficiary.  Additionally, the fund must generally be used by the time the beneficiary reaches age 30.

Yes, when the beneficiary reaches the age of majority, usually 18 or 21, depending on state.

Yes

Yes

No

Yes

Yes

Yes

Yes, up to twice a year.

Yes, unlimited.

Yes, unlimited.

Yes

No

No