By lwilliams
An article in U.S. News and World Report noted that 62 percent of 1,000 parents surveyed did not know what a 529 plans was or how it worked. That’s not surprising, considering there are more than 100 individual options available and plans can vary greatly from state to state. It can be intimidating and confusing, especially for those unfamiliar with financial investments, on choosing a method on how to save for college. But, when you consider the average student will leave college with approximately $33,000 in student loan debt, it makes sense to take a look at some of the college saving plans available and other creative ways you can start saving now for your child’s education such as 529 college plans. Here is a quick look at some available options from 529 plans.
There are two types of 529 plans: pre-paid tuition and college savings plans.
Pre-Paid Tuition
- Tuition prices are locked in at participating colleges and universities (public and private)
- Plans cover tuition and fees, but housing and meal fees must be purchased separately
- Lump sum payments and/or monthly payments based on beneficiary’s age and number of college years purchased
- Many plans are guaranteed and backed by the state
- Limited enrollment period
- Most require owner and/or beneficiary to be a resident of the state
- Most have an age or grade limit
College Savings Plans
- No lock on college tuition fees
- Covers all qualified college expenses
- Contributions can start as low as $15 a month (varies by plan and state)
- Subject to market risk (plan can increase or decrease in value)
- Open to adults and children
- No residency requirement
- Enrollment open year-round
The Gerber Life College Plan is an endowment life insurance policy that provides guaranteed growth and adult life insurance protection. Parents decide how much they can afford to contribute each month and receive a guaranteed benefit payment of $10,000 to $150,000. Although 529 plans contributions must be included when applying for financial aid, the Gerber Life College Plan does not affect a student’s eligibility for aid. It can also be used for any expense upon disbursement, although monthly contributions are not tax-deductible. 
Unlike traditional college saving plans, participants in SAGE Scholars Tuition Rewards Program accrue tuition reward points by investing and saving with SAGE’s financial affiliates, including 529 plans, banks, brokerage firms, credit unions, employers, mutual funds, and more. Each point is equivalent to $1.00 in tuition discounts. For example, if someone invested $10,000, he/she could potentially earn 500 points per year, which converts to a $500 tuition discount per year. There are more than 300 private, not-for-profit, colleges and universities currently participating in the program. Students must enroll in the program before August 31st of the year prior to high school graduation (typically between the junior and senior year). Unused points do not convert to cash. 
For more than 10 years, people have been saving for college by doing what they do everyday — shopping! Upromise (a SallieMae company) allows parents, friends, and family to earn money by shopping online at more than 800 participating stores, dining at any of the 8,000 available restaurants, or purchasing any of the thousands of participating products found at local grocery and drug stores. Registration is free, but members must register their credit, grocery, and/or drugstore cards to receive any of the participating offers. Funds are designated to specific beneficiaries or can be placed in a 529 plan. Any funds withdrawn and not used for educational expenses will be taxed and carry a 10 percent penalty fee.
The Earlier, The Better
As with most savings plans like the 529 college plans, the earlier you begin the better; payments tend to be smaller and the overall savings upon graduation may be significantly higher than those who wait until high school to begin preparing for college. Before committing to a plan, be sure to review all aspects of the program, such as monthly fees and management costs. It may also be a good idea to meet with a financial consultant to determine any tax breaks, benefits, or liabilities that may be associated with a specific plan or program. A little research will help you make an educated decision about your child’s college financial future.