With college tuition increasing each year, utilizing a Roth IRA to cover some of those college costs may be be a good idea. Also, Roth IRA contributions will not affect the amount of financial aid your student receives because Roth IRA contributions are not tax deductible.
Roth IRA Distributions
Roth IRA contributions can be distributed at any time tax and penalty free and used for any purpose including paying for college. What is more, Roth IRA earnings can also be distributed penalty free (i.e., the 10% early distribution penalty does not apply even if you are under age 59 1/2 at time of the distribution); however, federal and state taxes still apply unless you are both age 59 1/2 or older and meet the 5 year holding requirement which would allow for tax free distribution for earnings.
What is an Educational Institution?
Any college, university, vocational school, or other postsecondary educational institution eligible to participate in the student aid programs administered by the U.S. Department of Education, which generally includes all accredited, public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.
If you are self-employed and participate in a solo 401k plan, you can take a participant loan up to the applicable limit (50% of account balance or maximum amount of $50K.) from the solo 401k and use those funds for any purpose including to pay for higher education expenses.