REISTERSTOWN, MD--(Marketwired - Jul 24, 2015) - College costs have exploded over the years and a range of options have arisen to help pay for higher education. In addition to savings accounts, a variety of tax benefits exist, including tax exemption, tax deferral, tax credits, and tax deductions, but they can be complex to understand and each offers different degrees of advantage. Financial Union, Inc. a prominent financial services firm based in Reisterstown, Maryland, offers professional advice on the available strategies to ease the burden of paying for higher education.

When addressing the long-term goal of paying for college, students have several savings options: The first is the Coverdell Education Savings Account (Section 530 Program), which allows a parent or student to being saving at an early date for future expenses. A contribution of up to $2,000 may be made annually in each student's name, with no limit on the number of accounts for different children a parent may set up. These contributions are not deductible, but they grow tax-free until withdrawn. Regardless, there are major exceptions to taxation, as pointed out by one of Financial Union's leading experts: "Only the earnings portion is taxable, and in fact, even that is not considered taxable income as long as the amount withdrawn doesn't exceed a student's 'qualified higher education expenses' for the year which include room and board, books and tuition," he explains. "Section 530 Programs are applicable to both higher education as well as primary and secondary education and can be used for any expenses related to private school, religious school, or public school, which combined can result in a quite considerable amount."

The Qualified Tuition Program (Section 529 Program) is another great saving tool that works in one of two ways: a "prepayment option," which enables education credits to be purchased at today's costs, knowing that future costs will be higher; or a simple "education savings account." Both are impacted by federal and state taxes differently, which is why the experts at Financial Union, Inc. look at each client's individual situation to decide how to proceed. A third savings option is the use of Traditional and Roth IRAs to pay for college: IRA withdrawals before age 59 1/2 to pay qualified higher education expenses are not subject to the 10% tax on early withdrawals, provided the funds are used to pay educational costs at least equal to the withdrawal amount and may be used for oneself, spouses, children, or grandchildren.