College Trust Law and Legal Definition

College trust is a state-sponsored savings plan. It is intended for parents, or grandparents, who want to save money for their children to attend college. In a college trust, money is invested by the state in tax-deferred securities and taxed upon withdrawal but at a student's low tax rate, not that of the parents. The funds remain within the control of the parents thus allowing parents to divert the money to the child who needs the money for education if one child should get a scholarship.