College Savings - 529 plans

[N M 96]

It was SO simple back in my day. There were no tuition fees in early 90's Britain, and I even got a grant for living expenses!

But that was then. Now I'm here in the States, have a baby daughter and I'm looking to start her college fund. Colorado's 529 offers a tax deduction - but I'm still interested in what's available elsewhere. Anybody got any recommendations? Is your plan performing well, or should I avoid it like the plague?

Any tips would be gratefully received - with so many to choose from, it does seem a minefield.

Cheers

N

Edited February 20, 2011 by N M

[kutakendra 3]

Check your college savings plans. A private (Edward Jones, or someone like that) will hold one for you to invest in at intervals and amounts that are convenient to you. (I've always matched birthday money, and been on auto draft) They may not be tax deductible all the time, but they are transferable, (to you, another child, etc, if no college is used, or if needed for another financial emergency), and YOU are listed as the owner and trustee. That means your child can not run off with the money at 18 and buy a Corvette, like she can on some plans. Some State supported plans may not be as easily transferred or may have restrictions to get you to stay in state for school. I must say they are tempting, as you may only pay the going rate on tuition, but an advisor will be able to figure the rate of return, and you may be able to do just as well in stocks, bonds, and mutual funds with a broker. Many State plans are bankrupt, now, as well. That combined with not being as transferrable to unforeseen future needs, led me to open private accounts.

[CanadaLove 16]

There's a financial guru here in ATL who has an extensive list of 529 plans and which states are the best to invest with on his website: www.clarkhoward.com and then do a search for 529 plans. Hope that helps!

[N M 96]

Thanks CanadaLove!

Kutakendra - To be honest, I'm confused by a lot of your comments. As far as I understand State 529 plans are transferable to other (family member) beneficiaries, if the original intended beneficiary doesn't go to college. Am I wrong on that? Also I thought 529 plans had strict rules to make sure they are used for education - rather than (as you say) buying a Corvette.

As for many State plans being bankrupt??! Which ones?