Put Money Into Eligible Savings Bonds
Saving bonds are another great way to start saving for your child or grandchild’s education. They are guaranteed by the government and pose an extremely low risk. But, as we know, low risks come with low rewards. In this case, it’s the interest rate that parents or grandparents have to watch out for. For example, individual series EE saving bonds are earning an annual fixed rate of 0.10%.
But, here’s why these bonds are a particularly good way of paying for someone’s education. When you redeem them and use the money for tuition (minus room and board) you can then exclude the income from their annual gross income for tax purposes.
There are, of course, some restrictions and you’ll need to read all the fine print before deciding to go this route!