Here's more information about these options:
What is it? – Coverdell Education Savings Account was created to help parents pay for children's education at any level, from kindergarten through high school and beyond.
But if withdrawals are used for nonqualified educational expenses, they are subject to ordinary income tax plus a 10% penalty on the earnings. Any balance remaining in the Coverdell must be distributed or transferred to another eligible family member when the beneficiary reaches age 30.
Financial aid – College savings plans can impact a student's eligibility for financial aid. Regardless of whether the Coverdell is owned by either the student or the parent, it's generally considered a parental asset, which will likely have little impact on financial aid.
1 $10,000 limit applies separately to electronic Series EE and I bonds. $5,000 limit applies to paper Series I bonds.