From a purely tax perspective using money from the Coverdell is better since as long as you don't withdraw more than the qualified expenses there is no tax liability.The question not asked (but that's interesing IMO) is - from a financial aid perspective is there a difference?I don't think there is... I *think* they're both considered as student's assets on FAFSA.One difference I can see is UGTMA funds could be used for other things (ex. buying his sheets, dishes, microwave, etc. etc.) so that could be reduced that way, while this would probably be your opportunity to reduce the assets in the Coverdell, and you wouldn't have that opportunity again.(but doesn't make much difference if you would still have $ left in the UGTMA acct anyhow)
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