There was a time when students used to do odd jobs in order to fund their college fee and complete their education debt free but in today’s scenario it is quite difficult to complete a degree without blowing up tens of thousands of dollars in student loans.



Nowadays parents are making efforts to help their children towards saving money for their education and with a number of investment and savings opportunities available and with a number of complex laws it is a bit difficult to figure out where to start.



One should keep in mind that starting early is the key to accumulate as much as possible. There are a number of good options available which are stated below:



Coverdell Education Savings Account



Earlier called Education IRAs, these accounts enables parents to accumulate tax free earnings and withdraw money from their accounts without incurring any penalty. One could put in $2,000 annually per child and it could be utilized for school expenses for grades K-12.



529 Plan



Another plan is the 529 Plan which has been designed and sponsored by a state for generating savings for the named beneficiary for their higher education and this account could be created before a child is born and the minimum contribution required is $50. The earnings in the case of Indiana College Choice 529 Plan are federally tax deferred and withdrawals are tax free in case it is utilized for higher education costs. Till the age of eighteen the child cannot withdraw the money which enables the parents to retain the ownership.



Interested people could visit www.irs.gov for an eighty two page guide on education tax benefits and another site worth visiting is www.savingforcollege.com. Some other ways of saving money is through the Hope tax credit or through tuition deductions and since one could not file for both of them, families are required to find out what for which benefit they qualified for and which one offered them greatest tax advantage. People residing in Ohio are lucky enough as it allows annual deductions for contributions to the 529 plan on state tax returns.