Tutorial - College savings basics

Imagine your child coming to you with an acceptance letter from "the" college. The one he's been dreaming of all through high school. The one that perfectly matches her career aspirations. Perhaps even your own alma mater.

Only one thing could make you prouder – knowing that you have done your homework, too. That no matter where your child is accepted or what financial aid is offered, you have the resources to afford the college of choice.

Numerous surveys and studies have been published describing how parents prepare for future college costs. You probably don't need a survey to tell you what you already know:

• Kids grow too fast.
• College is expensive.
• The time to start saving and planning is now.

Your child's college tuition could be one of the largest expenditures you ever make. And, if you have more than one child, the financial commitment is even greater. The financial challenge you face is shared by millions of others.

Fortunately, American families with a desire to save for future college expenses now have more options than ever before. Traditional investment options–savings accounts, taxable investment accounts, annuities, and U.S. Savings Bonds–are now joined by more recent investment vehicles including Section 529 college savings programs and Coverdell education savings accounts.

New investment programs bring new opportunities, but they may make decisions more difficult for people who want the best education possible for the children in their lives.

With these pages, we hope to help you gain a basic understanding of your options so that you can maximize the return on every dollar you set aside for a child’s future. Our focus is on the increasingly popular “529 plan,” but we also explain other commonly used savings and investment vehicles.

Remember, even if your goal seems overwhelming now, the proper planning and saving can put the cost of any college within your reach.