Using Savings Bonds to Pay College Costs

Here's what to know about how the interest on savings bonds is taxed when the bonds are used to pay for education expenses.

My older son is starting college in the fall, and I would like to use his Series EE bonds tax-free for his expenses. The way I read the rules, however, I don't think I can. The bonds were purchased by various family members from 1994 through 2001 and have my son listed on the “to” line of the bonds. If I can’t use them tax-free, will the interest be taxed at my son’s rate?

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.