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Save for a Child's Education

Save for a Child's Education

We can help you develop a savings strategy for your child's college education.

The cost of higher education is high, and continues to climb at rates that far outpace inflation. Whether college is for a child, a grandchild or you, the sooner you start saving, the more time you may have for your money to potentially grow. U.S. Bank and U.S. Bancorp Investments, Inc. can provide products and services to help.

How Much Should You Save, and What Are the Best Ways to Save?

How much should you expect to save for college? The answer depends on a number of variables, including your time horizon, whether you're planning on a public or a private school, the potential to take advantage of financial aid and college tuition inflation rates.

  • Don't forget to factor in expenses that may add up to significant sums over the course of a college career, such as food, room and board, cell phone service, and transportation costs.

    Once you've defined your educational preferences and have an idea of projected costs, our education calculators can help give you an idea of how much you may want to save.

Choose an Education Funding Plan That's Right for You

Perhaps the best way to make a college education realistic in the future is to plan and save now. There are a number of investment accounts you can use to help save for a child's education, each with distinct features and potential benefits.

  • The following are three types of accounts that many families consider:

    • 529 College Savings Plans are tax-advantaged Plans designed to pay for qualified higher education expenses. Qualified distributions are federal income tax-free. Non-qualified withdrawals are subject to all applicable federal and state income taxes, and may be subject to a 10% federal penalty. Please consult your tax advisor or legal counsel for advice and information concerning your particular situation.

      Before investing in a 529 College Savings Plan, consider your state of residence, which may offer a 529 College Savings Plan with state tax or other benefits available only to residents of the state.

    • Coverdell Education Savings Accounts formerly known as the Education IRA, provide a potentially tax-efficient way to contribute up to $2,000 per year per beneficiary for elementary, high school and college expenses. Non-qualified withdrawals are subject to all applicable federal and state income taxes, and may be subject to a 10% federal penalty. Please consult your tax advisor or legal counsel for advice and information concerning your particular situation.
    • Custodial Savings Accounts (UGMA/UTMA) let you set money aside for a child’s education and other expenses in the child’s name. You control the investments, but the child owns the assets and ultimately controls the account after reaching the age of majority. A portion of withdrawals are taxed at the child's rate.

Will Savings Affect Eligibility for Financial Aid?

Eligibility for federal student aid is based on financial need and other factors.

  • The financial aid administrator at the college(s) you want to attend can help determine your eligibility. Even if the student is ineligible for financial aid for any reason, it still may be wise to complete the FAFSA (Free Application for Federal Student Aid) because the student may be eligible for non-federal aid from states and private institutions.

Borrowing from your retirement account to help pay for education expenses

Borrowing from your home equity or retirement account — or reducing your retirement savings contributions to help pay for college — is an option. However, doing so may impact your retirement savings goals.

Next Steps

Education Funding

Use Our Calculators

Financial Planning

Saving for education starts with becoming better informed. Compare 529 Plans, Coverdell Accounts and Custodial Accounts.

Customize scenarios for:

  • Retirement
  • Education
  • 401(k)
  • Insurance

We'll work with you to develop a plan that reflects your goals and dreams, and helps you make informed choices about your future.

Investment products and financial services are provided through U.S. Bank and/or its affiliate, U.S. Bancorp Investments.

Investment products are:

Not a Deposit Not FDIC Insured May Lose Value Not Bank Guaranteed Not insured by any Federal Government Agency

U.S. Bank, U.S. Bancorp Investments, Inc. and their representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. Clients should consult their tax and/or legal advisor for advice and information concerning their particular situation.

The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness.

For U.S. Bank:

U.S. Bank is not responsible for and does not guarantee the products, services, or performance of affiliates.

For U.S. Bancorp, Investments, Inc.:

Investment products and services are available through U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1.800.289.9999 or via www.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

Get Started

Invest with an Advisor

Work with a dedicated advisor. For people with $100,000 or more to invest.

Call to Invest

Talk to a Financial Consultant at U.S. Bancorp Investments. For people with $1,000 - $100,000 to invest.

Invest on Your Own

Set up a self-directed online brokerage account or IRA account with U.S. Bancorp Investments.

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