Q: Saving for college?

Posted Sunday, March 30, 2008 8:38 PM

Q: When and how should I start saving for college?

Brett Graff: College can be one of the biggest bank-breakers around, and it's best to start saving for education shortly after you get home from the hospital.

Consider opening a state-sponsored 529 savings plan. With these, you can invest money in the stock market and escape capital gains taxes when using the money on college tuition, room, board or even books. Prepaid tuition plans are also popular, and let you pay today's rates for a college education that's 18 years away. When you consider that college tuition has increased about 228 percent -- yes, that's right -- in the past 18 years, it's a pretty good deal. So are Coverdell Education Savings Accounts, which have a maximum contribution limit but can be used for elementary and high school tuition.

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