Saving for College Page Content Whether you are saving for your own education or for your children’s, it’s wise to start planning for college as soon as possible. Tax-Free College Savings A Coverdell Education Savings Account (formerly an Education IRA) accumulates interest tax-free. You can withdraw money from this account without penalty. Also, it's possible to put money into a state- or institution-sponsored prepaid tuition plan and not pay taxes on it until you withdraw the money. Contact your local credit union to learn more about this method of saving. U.S. Department of Education Resources The U.S. Department of Education’s (ED) federal student aid programs are the largest source of student aid in America. Every year, they award about $150 billion in grants, work-study assistance, and low-interest loans. Check out college.gov, a new site from the DOE, for more information about how to pay for college. Financial Aid and the FAFSA To apply for financial aid, students will need to complete the Free Application for Federal Student Aid (FAFSA). You can check out a free financial aid estimator, the FAFSA4casterSM tool to give you an early estimate of your eligibility. Remember that the first "F" in FAFSA stands for free, and you can submit your application for free online at the official FAFSA website. If you visit a .com site, you will probably be asked to pay to submit your application. Other Sources of Aid In addition to federal aid, be sure to look into scholarships and state and institutional aid. Check with the schools you are interested in for information about programs to consider. Contact your state higher education agency for more information about programs available in your home state. Other federal websites can also be a good source of information about potential aid. For example, veterans and their dependents, students training in various medical fields, and persons interested in earning funds in exchange for community service may qualify for other federal aid.