College Savings

College savings are the accounts and tools that help families set money aside for education costs. The best known are state-run education savings plans, which the tax code treats favorably. States run the plans, and the Internal Revenue Service sets the tax rules. Savings can interact with financial aid, because money a family has saved may affect what help it receives.

People usually bring questions about how these plans work, what expenses they can pay for, and how they are taxed. They also ask how savings affect financial aid, what happens to unused funds, and how college savings compare with other ways to save for a child.