To do so, youll want to consider saving into an education-based investment known as a 529 plan.
it’s possible for you to look up your states deduction policyhere.
Youre basically paying now to avoid any cost increases in the future.
The downside is that these plans can be restricted to schools that are in-state.
With aninvestment plan, you choose how to invest the money you save.
For that reason, most experts suggest going with the investment plan.
Most 529 investment plans come with options for age-based or custom plans.
With acustom plan, you choose how to divvy up or adjust your portfolio as you see fit.
With anage-based plan, your portfolio mix automatically adjusts as the beneficiary gets closer to college-age.
How to open a 529 plan
Before you open your 529 plan, decide on the state.
Use this tool to shop aroundand compare your states plans with other states, including fees and investment options.
Vanguard also has astate tax calculatorthat can tell you exactly how much your potential tax benefit is worth.
In other words, read the fine print so you know what youre getting into.
When enrolling, youll need to name an account owner (aka participant), which is probably yourself.
Keep in mind, its the owner, not the beneficiary, who controls the assets in the 529.
Most states do set limits between $350,000 and $500,000, however,per Nerdwallet.
(There is a way around it though, through a process known assuperfunding).
Also, its pretty easy to change the beneficiary on your 529 plan.
