Issued by the U.S. Treasury and backed by the U.S. government, Series I and EE savings bonds are 30 year bonds that offer tax-deferred growth and partial or full exclusion from federal income tax when proceeds are used for tuition at an eligible postsecondary institution.
Primary Features
Investors may buy up to $15,000 in Series EE and $30,000 in Series I bonds. There are income limitations that apply at the time of redemption of the bonds, which are as follows:
- Couples who file jointly lose tax benefits when their modified adjusted gross income falls between $81,100 and $111,100
- Singles lose tax benefits between $54,100 and $69,100
Control and Financial Aid Impact
When the bonds are purchased, owners must be at least 24 years old. If the bond owner is a parent and the proceeds are used for their children, the bond is considered to be a parental asset. If the proceeds are used for the parent's education, it is a student asset.
Very Secure Investments
Although these bonds are not as flexible as 529 plans or UGMAs, they are generally more secure than other investment options. Since the interest rate on Series I bonds is indexed to inflation, there is a built-in element of inflation protection that most 529 plans do not have.
