With consistently rising education costs, college savings planning is a necessity. But which plan is right for you? Consider your financial situation now and in the future, the age of your child when you start, and then set reasonable goals for yourself.

Federal Government Plan

Saving money for college can be accomplished courtesy of the US government. Your Congress sponsors the Coverdell ESA (education savings account) plan for those earning less than $110,000 (single tax filer) or $220,000 (joint tax filers) per year.

Although it has a modest annual contribution limit–$2,000 per student per year—withdrawals are tax-free if used for qualified education expenses. Qualified expenses include tuition, room, board, fees, and supplies.

You’ll also enjoy personal investment flexibility, as you can invest in stocks, bonds, mutual funds, and cash equivalents. You have no restrictions on the number of trades (buy or sell) you want to make.

While many people consider college savings plans the same as college investment funds, there is a difference. When you save for college using standard bank or credit union accounts, you receive a stated return (interest) at a disclosed rate.

Technically, college investment plans generate earnings based on the performance success—or lack—of the college investment options you choose. You should also evaluate child investment options in light of the presence or absence of tax consequences for earnings and/or withdrawals.

College planning often seems like a daunting challenge when you hear or read about the cost of a university education. Unfortunately, college costs continue to escalate and projections indicate that those parents and students without college funding plans will come up financially short for education expenses. But, where can you turn for help with college investment plans? Here are some suggestions for college funding options.

• College counselors. Like professional career coaches, college counselors try to help students and parents navigate the maze of scholastic and financial planning needed to have a successful university experience.
• College investment planning funds. College funding options, like the Gerber Life College Plan, offer help and information along with programs structured to saving for college. With flexible options, you can plan for college at affordable investment dollars.

Saving for college is challenging, but you have some excellent options. When you save for college, knowledge is power. The key is to identify the college funding options that are best for you. Here are some proven suggestions.

1. 529 College Savings Plan. College planning becomes easier and cost effective with a 529 educational savings account. Two features are primarily important: You can contribute up to your state maximum per year. Equally important, your earnings will grow tax-free.
   
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Whether your child is still learning to walk and mobilize their toddler tools, or moving deftly toward college age, you should be saving for college. Here are some things to consider to start saving for college properly.