Considerations
You have seen the outrageous projections of the cost of a college education in eighteen years, but no one really knows what the cost will be for certain.
The current rule of thumb is to set the investment goal at $100,000 for four years of a private college and $50,000 for four years at a public university. This may seem like a huge burden, especially if you have a big family, but by using this rule of "early and often," it can be achieved. What does "early and often" mean? This is a systematic investment plan started as soon as possible after your child is born. And this plan may call for you to invest $350 a month for each child's education.
Note: The $100,000/$50,000 investment goal is a ballpark amount; by saving this amount over time, your investment earnings and appreciation should more than counterbalance the impact that inflation will have on college costs. By saving tax-smart (using both traditional investment tax-saving techniques and maximizing those tax breaks especially carved out to encourage saving for college), your tax savings each year will also grow through the magic of compounding, adding to your final college nest egg.
The following are some tax-wise investment tools to help you reach your college saving goals. Because of the contribution limits of the following investment vehicles, your strategy should probably consist of one, two or several.