It's never too early to put away money for your child's education. Consider these options before choosing a plan. Watch this video to learn how to get started with a college savings plan.
Step 1. Start now
Start saving right now – even if your child is an infant. The more time you have, the more money you can save, and the more interest you'll earn.
Step 2. Get a 529
Sign up for a state-sponsored 529 savings plan. All the money you put in earns interest tax-free, and there are no fees or taxes when you withdraw it as long as you use it for school.
Step 3. Start an account in your own name
If you open any other accounts for your child's education, make sure you put the accounts in your name. This will make it easier for your child to qualify for federal financial aid because the financial-aid application assumes only 5.6 percent of a parent-owned account will be used to pay for college, versus 20 percent of a student-owned plan.
Step 4. Join Upromise
Register at Upromise.com, and you'll get money for your college fund every time you buy something at specific retailers and restaurants. You can arrange for the rebates to be deposited into your 529 savings plan every quarter.
Step 5. Consider other funds
Consider other plans, like mutual funds that specialize in college-tuition savings, or an educational IRA.
Step 6. Invest wisely
When investing for college, consider how many years you have to save.
Step 7. Get the word out
Tell loved ones about your child's college fund and ask them to contribute whenever there's a holiday, birthday, or special occasion.
Step 8. Have your child help, too!
College isn't just your responsibility! Once your child is old enough for an allowance or a part-time job, encourage them to add to their college fund.
FACT: Over the past thirty years, college tuition rates have risen between 5 to 8 percent a year – outpacing inflation.