Saving for College
Financial aid doesn’t just begin with the FAFSA. Saving early is one of the most effective ways to lower the overall cost of college and reduce future student loan debt. Even small, regular contributions can grow over time and expand your college options.
529 College Savings Plans
A 529 plan is a popular, tax-advantaged savings account designed specifically for education expenses.
Key Benefits:
- Tax-free growth and tax-free withdrawals for qualified expenses
- Iowa state tax deductions available to eligible contributors
- Low minimums: Start with just $25 — or $15 via payroll deduction
- Open to anyone — parents, grandparents, friends, or others
Learn more at CollegeSavingsIowa.com
Other Education Savings Options
Families may also explore additional education savings tools, such as:
- Coverdell Education Savings Accounts (ESAs)
- UGMA/UTMA custodial accounts
- Educational IRAs, including ROTH IRAs used for education
Each option has different rules regarding contributions, taxes, and how funds can be used. A financial advisor can help you determine the best fit for your goals.
Education Tax Credits & Deductions
When it’s time to pay for college, tax credits and deductions can reduce your costs.
Common tax benefits include:
- American Opportunity Credit – Up to $2,500 per student, per year (limit of 4 years)
- Lifetime Learning Credit – Up to $2,000 per return, per year
- Student Loan Interest Deduction – Deduct interest paid on qualified student loans
Visit irs.gov or consult a tax professional for details and eligibility requirements.
