Save for school with LMCU
From enrollment to graduation, set your scholar up for success with a tax-free2 education savings account.
Saving for college, made easy. And affordable.
While you’re shopping for lunchboxes and last-minute poster boards, it’s easy to lose sight of those long-term educational expenses — like college tuition. With an ESA, you can start saving sooner.
Tax-free earnings.
ESA earnings may be tax-free when used for qualified expenses.
More than college.
Funds can also be used for qualified elementary and secondary education expenses.
It takes a village.
Eligible grandparents, aunts, uncles, and family friends can all contribute.
Coverdell ESAs: The Basics
A Coverdell Education Savings Account (ESA) helps you set aside money and earn 0.60% interest1 that you can use for your child’s education. Contributions can come from eligible family and friends, and earnings can be withdrawn tax-free for use toward qualified expenses, helping your savings go further and your child aim higher.
College savings calculator.
The sooner you put money into a Coverdell Education Savings Account, the more your child will have come college time. Use this tool to see how today’s investment can become tomorrow’s tuition.
Learn more about Coverdell Education Savings Accounts (ESAs)
In general, ESA earnings can be withdrawn tax free when used toward qualified education expenses, whether for elementary, secondary, or higher education.
Qualified expenses typically include tuition, fees, books, supplies, equipment, and eligible special needs services. In many cases, computer technology, as well as room and board, may also qualify.
Anyone who meets applicable income requirements may contribute, including family members and friends. However, total contributions in a year cannot exceed $2,000 across all contributors.
If the ESA’s original beneficiary doesn’t attend college, unused funds may be rolled into another eligible Coverdell ESA, as long as the receiving beneficiary is under age 30.
The IRS also notes that remaining amounts generally must be distributed when the beneficiary reaches age 30 (unless they are a special needs beneficiary).
No, Coverdell ESAs have no maintenance fees or minimum balance requirements, making them an accessible way to save for a child’s education.
Both Coverdell ESAs and 529 plans help families earn tax-free interest to use toward their child’s education. 529 plans offer greater investment flexibility, wider income eligibility, and higher contribution limits, but Coverdell ESAs can be used for a broader range of K–12 expenses.
Yes, contributions can be made on behalf of the same child to both a Coverdell ESA and a 529 plan.
Why LMCU?
Whether it’s a first dorm or a first home, we’ll help your whole household achieve their financial dreams.
“We've been with Lake Michigan Credit Union for over 10 years.”3
The Garcias, LMCU members
One of America's Best Regional Banks & Credit Unions for 2026.
Newsweek, January 2026
Bundle our best products to level-up your financial wellness.
Disclosures
This APY is accurate as of 9/10/2026. Fees may reduce earnings. Rates are subject to change after account opening.
Lake Michigan Credit Union does not provide tax or legal advice. Please consult your tax advisor or attorney before making any decisions or taking any action based on this information.
All featured LMCU members were compensated for their time.
