College Savings Tips from LaSondra Rhodes

We are proud to feature this guest post by LaSondra Rhodes, Financial Services Professional at New York Life and mother of three, with her tips for college savings and education funding.

Questions About Education Funding

As a mom of three young children—two of them are twins—how to fund their education is always in the back of my mind. Will they even want to go to college? Will they want to start a business instead? What can I do to actively support three kids in school without breaking the bank? What is the best possible way to set my kids up for success?

These were all questions I had until I learned that there were several different ways to start saving for their education. I’ll take some time to highlight a few of those ways. Keep in mind there are other ways to save, and only a few are showcased here.

Before we go any deeper, let me say: please consult your tax advisor in regard to tax implications with any type of investment plan.


One of the most well-known college savings plans is a 529 account. These accounts can help pay for educational expenses. Recently, 529 plans were restructured to allow for parents to use the funds in the account for K–12 expenses, as well as college. The accounts can be created and contributed to by anyone. There are limits to how much can be contributed on a yearly basis1, but there’s no restrictions on who can contribute to the fund. The account is transferable to other family members if the person for whom the 529 is set up decides to not go to college. Overall, 529s offer tax-advantaged growth potential and tax-free distributions when used for qualifying expenses.

Coverdell Education Savings Account (ESA)

Much like a 529 account, a Coverdell Education Savings Account (ESA) is a trust or custodial account designed to provide tax-free appreciation of assets and tax-free withdrawals when the funds are used for qualified education expenses. Coverdells can be used for K–12 expenses that may arise if parents choose to take that route. The list of educational expenses is broader than that of a 529 account. Contribution limits exist with ESA accounts; those contribution limits are set by the IRS.2


UTMA is short for Uniform Transfers Minors Act and UGMA is short for Uniform Gift to Minors Act. These types of accounts are custodial accounts that allow you to open the account on behalf of your child. The account itself and any contributions made are owned by the child and are irrevocably transferred to them at either the age of 18 or 21. UTMA/UGMA accounts are not limited to educational expenses like 529s and ESA accounts. Contribution limits are determined by the IRS2 and can be made on a per-child or per-year basis.

Cash Value Life Insurance

Cash Value Life Insurance allows you to lock in your child’s insurability through a life insurance policy, while allowing for the accumulation of cash that can be withdrawn tax-free and has no restrictions on how the funds can be used. There are several variations of Cash Value Life Insurance that can be tailored to each individual family based upon their current needs.

Notes About College Savings

As I recommended at the top of this post, please consult your tax advisor in regard to tax implications with any type of investment plan.

1 Plans may vary depending on the state. Please check with your state on specific guidelines and rules.

2 The IRS sets contribution limits for certain investment accounts. Please view contribution limits through the IRS website at or consult your tax advisor.

Also, keep in mind that the Free Application for Federal Student Aid (FAFSA) may take certain accounts into consideration when applying. Learn more about the FAFSA at

Charter Moms Chats

Watch LaSondra Rhodes, Financial Services Professional at New York Life, speak with Inga Cotton about college savings on March 7, 2023 at 4:00 PM Central live on Facebook and YouTube.

LaSondra Rhodes is a Financial Services Professional at New York Life and a mom of three.

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