What is the best way to save for a childs college education?

Specifically I am in Illinois. They have a program: http://www.collegeillinois.com/en/

Is this the best option? Is there other better options? Is it better to just save money on your own in a mutual fund? Any additional info will help...|||The optimal solution will of course depend upon your and your child's tax and other financial situations. The best way to solve this is with a trusted financial advisor who knows your situation.



However, it is possible to educate yourself through the Web. There are many sites eager to show you why you should invest your monies with them. You can learn from these sites. But, it would behoove you to take a look at the college financial aid sites as well. Things could change a lot between now and college time if you have an infant. But, at least you could get an idea. E.g.,

http://www.collegeboard.com/student/pay/鈥?/a>



Here are a couple non-professional tips from little old me (whose child will go to college next year). Since I am neither financial nor college admissions/aid professional, you really need to validate this for yourself.

You can't start early enough. If you and your spouse make regular annual contributions, you will be surprised to see how quickly it grows from contributions AND dividend reinvestment. Grandparents can be an absolute godsend here. Gift tax laws permit up to a sizable amount per person giving. So, if they are each contributing to your or their account or accounts regularly, the savings will grow fast. Tuition, room, board, fees, and other miscellaneous expenses vary from school to school. If you have a kid in the college class of 2012 who will attend a private university, don't be surprised if the total bill = $225,000 to $250,000... shocked yet? ... and that is for 1 child! OK, if you are a diligent saver and this is a high priority for you, this is possible if you start early enough. Remember, you won't be making $250,000 in contributions. That is the necessary future value of this/these accounts after interest, dividends, and other gains. Most people will not have saved that sum per child. So what do they do? Not send their kids to college? Of course not. That is where financial aid kicks in. You don't need to become an expert now. It is too early. But, it makes sense to get a rough sense as to how the Expected Family Contribution is calculated. You need to know what % of your savings will be "taxed" and what % of your kid's savings will be "taxed" for the purpose of the financial aid calculation. Without getting overly complicated, suffice it to say that there is a big difference between you holding $100,000 in savings for your kid's education vs. your kid holding $100,000 in UGMA/UTMA savings for his/her education vs. your kid holding $100,000 in 529 Plan savings for his/her college education through a custodian! The financial aid office will "tax" your kid's savings to a higher degree than it will "tax" your savings. But, 529 Plan money held for your child is excluded. (I am irritated that I could not quickly find the citation for this; so, you need to verify what I was told directly by an Admissions Director a few weeks ago). I chose not to use 529 Plans in my state way back when because they didn't provide me with the investment options I wanted--too conservative for me. So, I put money into UGMA account(s). For many years that is fine. But for the financial aid applications process in your kid's senior year in high school, UGMA is bad, because it will become 100% your kid's money which will be very heavily "taxed" by the financial aid calculators. One can convert savings accounts to 529s up to the last minute, without a lookback period; but, it requires actually selling and repurchasing the shares with the obvious tax implications. So, talk to your advisor. I suggest investing in 529s. If you feel overly restricted in terms of investment options which have improved a lot over the years, fine, do what you want. But, plan to convert over to 529s at an advantageous time before Dec 31st of your kid's senior year in high school. Of course stay tuned to changes in tax laws and financial aid practices. Good luck with this. I hope this helped a little.|||I looked at the website that you provided and I don't believe that I would go through them. First of all I noticed that the older your child is the more expensive it is for you to pay for 9 semesters. Second if you choose a plan now and then want to change it later it is $15 for every little change you make. ie beneficiary, the plan itself, the payer of the plan. Third, if you have to cancel the plan (for reasons other then death) then you only get $100 back even if you put in for years and payed thousands of dollars.



No.



You also asked if mutual funds would work and well, yes, they can work but you will have to pay for a broker or figure it all out on your own (Mutual Funds for Dummys or the Idiots guide to Mutual Funds) and that can be very time consuming unless you are willing to just go off of what the broker tells you to do (you can get a broker online with etrade.com or other websites like that).



So... IMHO a ROTH IRA would be your best bet. The reason why is because yes you could pay for all the tuition now and then have the college waiting for another 5-10 years before your child even goes but if you did the same think with the ROTH IRA then it will earn interest and more money will be available.



Again that is what I would do and I am NOT a financial advisor at all but if you would like some more choices then I have provided a link that I think would help you out a lot.|||A 529 Plan is almost always best.