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College Savings

What Is a College Education Worth?

College-educated, full-time workers statistically enjoy a higher median income than those with less education. In a recent report on education and earnings, the College Board found that workers with a four-year college degree could expect to have substantially higher earnings than high school graduates.1 Over a lifetime of work, 39 years on average, a person with a college degree earns 61 percent more than a typical high school graduate over the same period. In dollars, that's about $800,000 more over their working years.2

Workers with college degrees are also less likely to face unemployment. For example, in 2007, the rate of unemployment for workers over age 25 with college degrees was 2.2 percent, while the rate of unemployment for workers with high school diplomas was 4.4 percent. So not only does a college education hold the promise of a better-paying job, it promises greater job security and marketability. The following chart shows the impact of education on earnings and unemployment rates.3

Education Pays

College Chart

What Does College Cost?

Researching the cost of college may give you sticker shock! For the 2007-08 academic year, the average one-year cost of tuition and fees, and room and board, at four-year public colleges in the U.S. was $13,589.4 When this annual figure is multiplied for four years of study, the total reaches $54,356. And that’s not everything – these figures do not include books, the cost of transportation to and from school, and other incidentals. Costs for a two-year program at a local junior college are much less, but even those went up 4.2 percent from 2006-07 to 2007-08.5 So what is a parent to do?

Start Planning Early

The best way to deal with rising college costs is to start saving and planning early. While most students qualify for some amount of financial aid, it’s not likely to cover everything. Many families will need to find ways to fill the gaps in financial aid. Some steps to take now that will make it easier to reach your goal:

Coverdell Education Savings Accounts (CESAs)

A Coverdell Education Savings Account (CESA) is a tax-favored account designed to help families accumulate funds for future education costs. While contributions (limited to $2,000 per beneficiary per year) are not deductible, earnings accumulate tax-deferred, and qualified withdrawals are tax-free.6 Examples of “qualified education expenses” include tuition, fees, tutoring, special needs services, books, supplies, room and board, uniforms, and transportation.

Distributions for “qualified education expenses” are tax-free if made before the beneficiary attains age 30.7 The designated beneficiary for a CESA may be changed to another family member8 with no current income tax consequences if, at the time of the changes, the new beneficiary is under age 30. Non-qualifying distributions of earnings are subject to income tax and a 10 percent IRS penalty.

Income Restrictions – Contributions
Filing Status Income Level9
Single $95,000 - $110,000
Married, filing joint $190,000 - $220,000

To learn more about the advantages of a CESA, or to set up an account for your child, contact a representative from Western-Southern Life Assurance Company.

  1. The College Board, Education Pays, 2007
  2. Figures do not take inflation into account.
  3. Data are 2007 annual averages for persons age 25 and over. Earnings are for full-time wage and salary workers.
  4. Annual costs are for the 2007-08 academic year and include tuition and fees, room, and board. Books, transportation, and personal expenses are additional. Costs for out-of-state students at public institutions are higher than for in-state residents.
  5. The College Board: Trends in College Pricing, 2007
  6. The rules discussed here concern federal tax laws; state or local tax may vary.
  7. Special-needs beneficiaries are not subject to these age limits.
  8. See IRS Publication 970 for applicable definition of “family member.”
  9. Based on modified adjusted gross income. Amounts noted represent income levels in which a partial contribution can be made. No contribution can be made if income is above the upper-tier amount.

Securities offered through W&S Brokerage Services, Inc.

Touchstone Funds are distributed through Touchstone Securities, Inc.*

* Member FINRA / SIPC

The information presented on this Web page is only a brief description of the features of a Coverdell Education Savings Account. This material is intended solely as helpful general information. Neither W&S Brokerage Services, Inc., nor any of its affiliates or agents give tax or legal advice. The laws and regulations associated with topics discussed here are complex and subject to change. For specific tax information, consult your attorney or accountant and obtain free Publication 970, “Tax Benefits for Education,” from the Internal Revenue Service at or by calling 1.800.TAX.FORM (1.800.829.3676).

An investor should carefully consider the investment objectives, risks, charges, and expenses found in the prospectus. For a prospectus containing complete information about a Touchstone Fund and a performance fact sheet, contact W&S Brokerage Services, Inc., at 1.877.452.4597. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing or sending money.


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Last Updated: 12/14/2017