Education Savings Account

Written by Michael Federico
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Education savings accounts (ESAs) are designed to make it easier to pay for college. There are accounts that have been established by specific universities. Generally, these will allow people to put money towards a student's tuition as soon as the student is accepted to an accredited, secondary, higher learning institution. ESAs can also be established through banks or other financial institutions.

In education savings accounts, the money is used for the recipient's education. There may be tax breaks on education savings accounts. The amount of money that can be put into an ESA each year is dependent on the contributor's income. There are annual limits on all ESAs.

Starting an Education Savings Account

The general belief is that the earlier a person can establish an education savings account for a child, the better. Most accounts only allow contributions to be made until the child turns 18, so time is often at a premium. Most accounts also allow anyone to contribute, which can help alleviate some of the strain on the parents.

The number of American students who can afford to go to college is decreasing. Any money that can be set aside will make things easier when the time comes for the child to enter an institution of higher learning. Different types of education savings accounts have been developed in the past few years, and the government is actually trying to create more programs that will allow more kids to go to college.


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