4 Alternative Ways to Save for College
![girl riding bicycle on campus](https://money.com/wp-content/uploads/2016/01/160201_coll_beyond529s.jpg?quality=60&w=600)
There are other ways to save for college costs besides the traditional 529 plan. Some offer more flexibility, although none have quite the same advantages. Here's a quick look at the options.
ROTH IRAS
Upside: These are geared for retirement, but you can withdraw contributions, which are shielded from financial aid calculations, at any time.
Downside: Couples can contribute only $11,000 a year—and that should really be earmarked for retirement.
UGMAS AND UTMAS
Upside: Little.
Downsides: These accounts, which predate 529s, are essentially obsolete for new savers. Tax benefits are limited: Only the first $1,050 of withdrawals are tax-free; the next $1,050 are taxed at the child's rate, and the rest are taxed at your rate. You can't change beneficiaries.
COVERDELLS
Upside: Even more flexible than 529s, the Coverdell allows you to pay for college or private school.
Downside: The maximum contribution is $2,000 per student per year.
SAVINGS BONDS
Upside: Interest earned on Series I and EE savings bonds is exempt from federal income tax when used to pay for higher education.
Downside: With college costs still rising, you'll generally need better returns than what you can get here; roughly 1.6% for I bonds, and 0.1% for EE.
This is a part of a feature on investing for college, you can read more here and here.