Skip to content
  • Forms
  • Contact
  • Call 800.425.0653
  • Client Login
  • Open Account

Advanta IRA

  • Self-Directed IRA
        • Self-Directed IRA

          Self-directed IRAs are powerful retirement plans that allow account owners to use alternative investments, such as real estate and private equity, to build retirement wealth.

        • Advanta-self-directedi-IRA-SD-IRA
          • Self-Directed IRA
          • What Is a Self-Directed IRA?
          • Types of Accounts
          • How much does it cost?
          • Resources
          • FAQs
        • Advanta-self-directedi-IRA-Alternative-Investments
          • IRA Alternative Investments
          • Real Estate
          • Private Lending
          • Checkbook IRA
          • Private Placements
          • Cryptocurrency
          • Precious Metals
          • Other Investments
        • Advanta-self-directedi-IRA-Rules-and-Regulations
          • Rules & Regulations
          • Prohibited Transactions
          • Contributions
          • Transfers & Rollovers
          • UBIT & UDFI
          • Fair Market Value
  • Real Estate IRA
        • Real Estate IRA

          Real estate IRAs are popular with people who want diversity and leverage against potential losses in the stock market. You can choose your own assets including commercial and residential property, raw land, as well as tax liens and deeds.

        • single family home with for rent sign
          • Real Estate IRA
          • What is a Real Estate IRA?
          • Real Estate IRA LLC
          • Partnering Funds
          • Non-Recourse Loans
          • Rules & Regulations
          • FAQs
        • Advanta-self-directedi-IRA-Real-Estate-Investments
          • Real Estate Investments
          • Notes & Mortgages
          • Rental Property
          • Rehab & Flips
          • Tax Liens & Deeds
          • Commercial & Multifamily Property
          • Raw Land
  • Resources
        • Resources

          Blogs, events, videos, case studies, rules and forms—find all of the tools and resources you need to take control of your retirement funds and invest with confidence.

          • Resources
          • Events
          • Blog
          • Case Studies & eBooks
          • Video Library
          • Advanta IRA Podcast
          • Professional Resources
          • Rules & Regulations
          • FAQs
          • Forms
        • Advanta-self-directedi-IRA-Resrouces
  • Why Advanta IRA
        • About Us

          Advanta IRA provides unparalleled customer service, an innovative learning platform, and industry expertise to help you self-direct your retirement funds and successfully invest.

          • Why Advanta IRA
          • The Advanta IRA Advantage
          • History
          • Mission & Values
          • Our Team
          • Testimonials
        • Advanta-self-directedi-IRA-Why-AdvantaIRA
  • Advisors & Professionals
  • Get Started
  • Events
  • Open Your Account
  • Contact Us

Blog

November 5, 2019Scott MaurerAlternative Investments

Self-Directed ESAs: Help Your Child Avoid Student Loan Debt

If you are searching for options to help finance your child’s college education, Advanta IRA has a potential solution to help your child avoid student loan debt. We are referring to self-directed education savings accounts, which allow you to choose the assets for the plan based on your own knowledge of different assets. You’re able to use alternative investments (real estate, private lending, private equity) to build wealth in the account. And, doing so can increase the earning potential of the education plan at a faster pace than traditional stocks and mutual funds.

Interested? Read on as we cover a few stats on student loan debt and explain how education savings accounts work, especially when they are self-directed.

The Cost of Higher Education and Living Expenses Thereafter

As the cost of higher education continues to rise, so does the weight of student loanMale and female college students sitting at desks in a sunny classroom listening to their professor review the day's lesson. debt. According to Pew Research Center, as of March 2019, Americans owe approximately $1.5 trillion in student loans, with the majority of this debt owed by young adults ages 18-29.

As daunting as it seems, if young adults want to be successful, they need education beyond high school. Young college graduates are more likely to have higher earnings later in life than those without a bachelor’s degree. If a high school graduate chooses not to further their education in some way, they will become part of the unskilled workforce in this country. We are not trying to minimize the place for unskilled workers at all. But, with the federal minimum wage at $7.25/hour, research shows that it’s nearly impossible to survive on minimum wage in the United States. Some states have a higher minimum wage. But, check out a living wage calculator to see the reality of the income needed to survive in today’s world whether single or married with children. The struggle for many is real.

The best chance for a young adult may mean going to a traditional 4-year college, junior college, or technical school. If future education expenses aren’t made by parents contributing to some type of education savings plan starting when the child was born, this could mean incurring debt that the student isn’t thinking about when they take out the loans.

Over the past 12 years, interest rates have ranged from 3.4 percent to 7.90 percent, depending on the loan, and rates have been rising since 2016. The 2019-2020 federal student loan interest rate for direct subsidized and unsubsidized loans (undergraduate) is 4.53 percent, while direct unsubsidized loans for the graduate or professional is 6.08 percent, plus loan fees.  If a parent needs to take additional loans to help the student pay for their college education, they are looking at 7.08 percent for a Direct PLUS Loan.) YIKES!

How Self-Directed Education Savings Accounts Can Help Avoid Student Loan Debt 

To help your child succeed, plan to start early. The Coverdell ESA allows up to $3,500 in 2019 of after-tax contributions to be made in your child’s name until the their 18th birthday.

These funds can grow tax-deferred, and you don’t have to pay tax on any annual growth of the investment. And, unlike 529 plans, Coverdell ESA funds can be used for qualified K-12 expenses as well, such as tuition, computers and laptops, books, supplies, tutoring, and transportation without penalty of early withdrawal.

A self-directed education savings account can potentially grow funds a bit faster than traditional investing. Self-directed accounts allow investments not available in other plans.

With 529 plans, you must choose from the investments offered. However, the alternative investments available in a self-directed ESA range from gold, rental property, private loans, startups, cryptocurrency, private equity, and so much more.

What if your child decides not to further their education after you’ve build considerable funds in a self-directed education savings account? If the money isn’t used by the time they’re 30, it must be given to them directly or rolled over into another Coverdell ESA for another family member. If there is not another family member who can use the funds—you’ve still built your child quite a nest egg, which can give them a leg-up in life as they are starting out.

To learn more about how self-directed ESAs work, please contact Advanta IRA. Our team is happy to speak with you about the benefits and explain how alternative investments have the potential to grow your retirement plans, as well.

Free eBook

Self-Directed IRAs:
Take Control of Your Retirement Funds

Download

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)

About Scott Maurer

Scott is an attorney and a graduate of the University of Florida Law School. Scott started his career with Advanta IRA in 2006. His experience with various investment types and their unique processes makes him an invaluable asset. Scott holds the designation of Certified IRA Services Professional (CISP) and leads engaging seminars and webinars that educate the public on the intricacies of self-directed IRAs.

TAGS: self directed ESA, student loan debt

Post navigation

← Retirement Saving Tips for Women to Take Control and Build More Wealth in IRAs Real Estate Syndications Make Investing in an IRA Easy for Beginners →

Posts by Topic

  • Alternative Investments
    • Cryptocurrency
    • Precious Metals
    • Private Equity
    • Private Lending
  • Checkbook IRA LLC
  • Guest Blog Article
  • Industry News
  • IRS Rules and Regulations
  • Plans for Individuals
  • Plans for Small Businesses
  • Real Estate IRA
    • Multifamily & Commercial
    • Notes & Mortgages
    • Raw Land
    • Rehab & Flips
    • Rental Property
    • Tax Liens & Deeds
  • Retirement Planning
  • Savings Accounts (HSA & ESA)
  • Self-Directed IRA

Recent Posts

  • Roth IRAs vs. Traditional IRAs: A Comparison of the Benefits and the Differences
  • Self-Directed IRAs vs. Traditional IRAs: Which Plan Is Best for You?
  • Important Tax Payment Deadlines and a Retirement Planning Tip for 2023
  • 7 Ways the SECURE Act 2.0 of 2022 Enriches Your Retirement Planning
  • Why Consider a Self-Directed Health Savings Account?

Subscribe to Our Blog

  • Self-Directed IRA
  • Traditional IRA
  • Roth IRA
  • Solo 401(k)
  • SEP IRA
  • SIMPLE IRA
  • Inherited IRA
  • Health Savings Account (HSA)
  • Education Savings Account (ESA)
  • Qualified Recordkeeping
  • Alternative Investments
  • Real Estate
  • Private Lending
  • Checkbook IRA
  • Private Placements
  • Cryptocurrency
  • Precious Metals
  • Other Investments
  • Forms & Guidelines
  • Rules & Regulations
  • Contributions
  • Company
  • The Advanta IRA Advantage
  • Our Custodian
  • Careers at Advanta IRA
  • Our Team
  • Open an Account
  • Client Login
  • Call 800.425.0653
  • Email Us
  • Privacy Policy
  • Terms of Use
  • Legal Disclaimer
© 2023 Advanta IRA | Site by Going Interactive

Confidently invest so you can retire with wealth.

Let’s talk about how a self-directed IRA can help make that happen.

GET THE ANSWERS YOU NEED.