Comparing Ways to Plan for College

woman putting change into piggy bank

When it comes to planning for college expenses, it's important to choose the method that's right for you. With so many ways to put money aside for college — how can you be sure you're choosing the right one? This college plan comparison will help you weigh your options.

"Unlike other options which vary due to economic climate, the Gerber Life College Plan, grows over time, without market risk."


Gerber Life
College Plan

Bank Savings


Guaranteed Growth


No Stock Market Risk


Life Insurance Benefit


Use of Money not Limited
to Just College Expenses


Tax-Deductible Contributions


1If invested in stock

Bank Savings Accounts

Traditional bank savings accounts are a safe way to save for college — or anything else — so long as you don't tap the accounts for other expenses. While they are very safe, interest rates on traditional savings accounts tend to be very low, so it can be hard to build wealth beyond what you're putting into the account.

Assets grown through traditional bank savings accounts are taxed.

Coverdell Education Savings Accounts (ESAs)

Coverdell ESA savings accounts allow you to save up to $2,000 a year per child, tax-free. The money can be used to fund college education, as well as other K-12 educational expenses. All contributions to ESA accounts must be made before the beneficiary reaches age 18. The funds must be used by the time the beneficiary is 30. Funds saved through an ESA don't have to be used for college.

529 Plans

529 Plans are tax-free savings plans designed specifically for saving for college. Although 529 Plans are tax-free, account holders can incur penalties upon withdrawing funds, or upon claiming education-related tax credits, such as the Hope, American Opportunity of Lifetime Learning credit. When considering a 529 plan, it's important to talk to a tax professional to ensure that you'll get the maximum tax benefit.

If you choose to invest your 529 Plan in stock, you may have greater growth potential, but also greater risk, depending on the fluctuations of the stock market.

Stocks and Mutual Funds

Stocks and mutual funds can be a more aggressive way to save for college, but offer no guaranteed returns. Stocks and mutual funds can increase at a higher rate, resulting in a higher payout, but, again, there's risk. Additionally, investing in stocks and mutual funds require a more in-depth knowledge of financial markets, as well as keeping up with market fluctuations.

Gerber Life College Plan

Unlike other options which vary due to economic climate, the Gerber Life College Plan, grows over time, without market risk. This makes the Gerber Life College Plan a smart way for families who like the security of knowing how much money they will have when it’s time for college.  The College Plan also provides the additional benefit of adult life insurance protection.

When your policy reaches maturity, between 10 to 20 years, you have the flexibility to use the money toward anything you want, not just college expenses. So, your child or grandchild could use the money to start a business, as a down payment on a house, or for whatever his or her future may hold.

Which Plan is Right for You?

Compare your options and decide what's important to you. Are you comfortable with risk or do you want something that is guaranteed? Would you rather know exactly how much you'll have when it's time for college or are you comfortable with not knowing? Do you want tax advantages or is that not a concern? Would you rather have flexibility to use the money you have watched grow for anything, or be limited to using just for college?

Whatever you decide, remember the sooner you start to prepare, the better.

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