Are Series EE savings bonds a good way to save for college?
Savings bonds are issued by the U.S. government, so they are extremely safe and an easy way to put aside money. They re also inexpensive. A $50 savings bond, which you can redeem at its full face value when the bond matures, can be purchased for only $25. The most popular type of savings bond is the Series EE bond, which many parents purchase to help fund a child s college education. Series EE savings bonds can be good choices because of their low risk and tax advantages when compared with CDs and because the federal tax is deferred until the bonds are redeemed. The interest is also exempt from state tax. For clients with joint modified adjusted income below $68,250 (indexed for inflation), the interest is free of federal income tax if the proceeds are used for qualifying educational expenses. Still, not all college-related costs are considered “qualifying educational expenses” for tax purposes. Tuition and fees to attend a college, university, technical institute or vocational school