DEFINITION of 'Baccalaureate Bond'

A zero-coupon bond issued by certain states to assist families in saving for college tuition by means of added tax benefits. Baccalaureate bonds are offered by many states and are tax-free securities that allow states to lend at reasonable rates, while issuing tax-free bullet bonds to citizens wishing to save over time for post secondary expenses, namely tuition.

BREAKING DOWN 'Baccalaureate Bond'

These bonds are typically issued in small denominations and are offered in several maturities, making them more convenient for investing and paying yearly college tuition fees. In some states, additional benefits such as tuition discounts may be included if the student enrolls in a state college using these bonds for payment. When combined with other tax-advantaged college savings tools, baccalaureate bonds are an efficient way of saving toward post-secondary education.

RELATED TERMS
  1. Prepaid Tuition Program

    One of the two major types of 529 plans. Prepaid tuition plans ...
  2. 529 Prepaid Tuition Plan

    A tax-advantaged method for paying future college tuition costs ...
  3. Tuition Insurance

    A type of insurance that allows families to recoup some or all ...
  4. U.S. Savings Bonds

    A U.S. savings bond is a government bond that offers a fixed ...
  5. Bond

    A bond is a fixed income investment in which an investor loans ...
  6. Discount Bond

    A discount bond is a bond that is issued for less than its par ...
Related Articles
  1. Investing

    Spoil Your Grandkids, Cut Your Tax Bill

    Helping your grandchildren save for college is a way to spoil them and reap some benefits yourself.
  2. Managing Wealth

    Great (Financial) Gifts For Kids This Christmas

    Parents, grandparents and other interested adults can give financial gifts to children that can help secure their futures, whether it’s saving for a first car, college or a down payment on a ...
  3. Personal Finance

    Avoid These 3 College Tuition Blunders

    Avoid these big financial blunders when trying to save or pay for college.
  4. Financial Advisor

    Using 529 Plans to Save for College

    Paying for college is no easy feat. Here is a lowdown on 529 plans, the educational savings plans that help families set aside funds for college costs.
  5. Taxes

    Maximize Your Tuition Tax Benefits This Year

    To help college students pay their tuition bills and give America that extra push to get an education, the government has come up with a $2,500 tuition tax credit.
  6. Insights

    Top 10 Companies That Will Pay for School (SBUX, T)

    Scrutinizing employee benefits can help people in the job market chose employers strategically to find companies that will pay for school.
  7. Personal Finance

    5 Colleges That Are Slashing Tuition Costs

    Schools are cutting tuition fees because of the economic times. We tell you which ones are cutting prices.
  8. Investing

    Savings Bonds For Income And Safety

    Bonds offer undeniable benefits to investors, including safety and tax advantages.
  9. Retirement

    4 Smart 529 Plan Alternatives to Consider

    Learn about some alternatives to the popular college-saving 529 plan that may also make sense, such as prepaid tuition plans and Coverdell accounts.
  10. Personal Finance

    10 Companies That Will Pay for Your MBA (BAC, WFC)

    Discover ten institutions of higher learning that are willing to help finance your MBA in exchange for your commitment to work for them.
Hot Definitions
  1. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  2. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  3. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  4. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
  5. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability of potential investments.
  6. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
Trading Center