Chapter 11 - QSTP vs. Series EE Savings Bonds

Under certain conditions, an owner of. Series EE U.S. savings bonds may redeem those bonds and exclude the interest from income if the proceeds are used for certain qualified higher education expenses (QHEE). Only Series EE bonds issued at a discount after 1989 to an individual who is at least 24 years old before the bond’s issue date may qualify for the exemption.

….For the college saver who appreciates the investment characteristics of U.S. savings bonds, this set of rules makes planning interesting, to say the least. To use the bonds in conjunction with an account in a QSTP becomes challenging.

….If you could only choose one, which investment, qualified U.S. savings bonds or a QSTP, is the best choice for college savings? The answer is that it depends on a number of variables.