Baccalaureate Bond

Baccalaureate Bond

A zero-coupon bond issued in some U.S. states to pay for college tuition expenses. That is, a student or his/her family purchases a baccalaureate bond, the proceeds of which help pay for tuition at its maturity. Baccalaureate bonds are usually issued in small denominations and have varying maturities that correspond to the due dates of tuition.

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Baccalaureate bond. Baccalaureate bonds are tax-free zero coupon bonds issued by certain states specifically to help families accumulate assets to meet college tuition costs.

The bonds are usually sold in small denominations, so that you can buy several, with maturity dates that correspond with the dates that tuition payments are due.

In some states, baccalaureate bondholders receive a small tuition discount if they use the bonds to pay for attending an in-state school.