Smart Saving for College—Better Buy Degrees
Series EE and I Savings Bonds
U.S. Series EE savings bonds issued after 1989 or Series I saving bonds are another tax-advantaged way to save for college.
Backed by the full faith and credit of the United States government, the interest from these bonds is tax-free if used for qualified higher education expenses. Also, interest on Series EE and I savings bonds is usually exempt from state and local taxes.
Income limits apply. In tax year 20121 the full interest exclusion is only available to couples filing jointly with modified adjusted gross income of less than $109,250, and for single filers with modified adjusted gross income of less than $72,850. The interest exclusion is phased out if your modified adjusted gross income is between $109,250 and $139,250 for joint filers, and between $72,850 and $87,850 for single taxpayers. You can learn more about the Educational Savings Bond Program in IRS Publication 970: Tax Benefits for Education.
The rules for using savings bonds for education can be complicated. To learn more about using savings bonds for educational expenses, you can call the Federal Reserve toll-free at (800) 553-2663. You can call the Bureau of Public Debt toll-free at (800) 487-2663 for information on the latest rates for Series EE and Series I savings bonds, or at (800) 722-2678 to learn how to buy savings bonds directly from the federal government.
Savings Bond Online Resource
The Bureau of Public Debt's website provides information on the latest rates for Series EE and Series I savings bonds and how to buy savings bonds directly from the federal government.
1 See IRS Publication 970 for 2013 updates.
Download the print version:
FINRA Investor Podcast, Smart Saving for College—Part 1: 529 Plans
FINRA Investor Podcast, Smart Saving for College—Part 2: Other Tax-Advantaged Options