What to I need to know about using savings bonds to pay tuition?

Answer by  Chaneygirl (1755)

If you are doing it to exclude the interest for tax purposes, the bonds must be in the parents name and the amount be under $10,000. Also, education credits will be limited or excluded if the savings bond interest is excluded.

Answer by  dpauleyii (843)

The bonds are purchased at half value and then will come into maturity in 7 years. After the 7 years they will start accruing interest. If you have more than 7 years to wait, you may want to consider a dividend stock. It will give you a better rate of return on your money. Talk to a broker for help.

Answer by  Duncan (1124)

Savings bonds are purchased at below face value, and then mature over the years to reach face value or greater. Cashing in your bonds before they have fully matured means that you may not get the full face value. Older bonds from the 1990s have a high interest rate.

Answer by  tamarawilhite (17883)

If you cash out a savings bond and use it to pay for books, fees, or tuition, then you do not pay income tax on the bond's income on your taxes.