Saving for Your Child's College? Consider a 529 Savings Plan

GUEST POST-

Saving for Your Child's College? Consider a 529 Savings Plan

Ask any current or soon-to-be parent and they will likely tell you that among the myriad of things they worry about, paying for their child's college is pretty high on the list. With tuition and fees increasing by the day, there's no telling what college rates will be ten or twenty years from now.

Being such a prevalent, real problem, it's no wonder that several methods and plans for savings seem to be popping up left and right these days. One of these methods is the 529 Plan—an education savings plan operated by a state or educational institution.

A little over a decade old, these types of savings funds were created in 1996 by the Internal Revenue Service.  Offered in nearly every state in the U.S., the plan provides a full, detailed list of participating areas for people to check before they get their mind set on investing. Different states have different types of plans, so it's important for parents to do their research before choosing one. Also, only certain schools and educational institutes participate in the 529 funds program, so it's important for parents to keep that in mind, as they make their decision.

Plans can either be classified as "savings" or "prepaid." A 529 SAVINGS plan works like a 401k or other long-term investments in that you, the parent, make investments with your contributions. The fund then fluctuates based on the performance of those investments.

A PREPAID 529 plan, on the other hand, lets you pre-pay all or part of the costs of an in-state public college education. These also offer a bit more flexibility as it has the ability to be converted for use at both private or out-of-state colleges; however, there is a separate private college plan for those interested.

Overall, regardless of type, these plans are a great option because they allow parents to essentially "set it and forget it." With the option to implement automatic savings or investing decisions, parents can make a decision once and then let the plan run itself. This helps it stay out of sight and out of mind until it's needed, which increases the likelihood that that money will still be there, ready and waiting, for when your little one ships off to school.

Some of you might think it's a bit too soon to be thinking about this, but when it comes to your child's future, you can never  be prepared enough, so might as well get a jump start, right?

Maria Rainier is a freelance blogger and writer for onlinedegrees.org. Maria believes that online degrees and online universities are the future of higher learning. She is interested in all things concerned with higher education and is particularly passionate about life after college. Please share your comments with her.