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How To Decide Between An ESA And A 529 College Savings Plan

If you haven’t started your kid’s college fund yet, don’t sweat it – the cost of a 4-year public university is only expected to exceed $200,000 by 2030, which you’ll probably have laying around somewhere. If you do want to get a jump on it, though, you have 2 choices: a Coverdell Educational Savings Account (ESA) or a 529 plan. These are often proposed as an either/or proposition, but the truth is that they serve pretty different purposes. The ESA is more flexible, as you can use the funds for any level of education, and for more kinds of educational expenses; the 529, meanwhile, is specific to college and more strict about what the funds can be spent on. The full breakdown of differences is here, but the bottom line is this: put some money for college away somewhere, or the kid may never experience the joys of freshman dorms, cramming for finals, or soul-crushing student loan debt.