It’s never too early to start thinking about the future, especially since certain parts of the future (ahem, college) can be very expensive. According to The College Board, the average tuition rate for a four-year college or university is now just over $32,000 a year. Fortunately, with careful planning, saving for college doesn’t have to break the bank. As New York Times and Forbes contributor John Wasik points out, “Early saving reduces debt over time.” That means if you have children, start saving when they’re young or “ideally before you even have children,” says Wasik.
To help you get a head start, see a few of the best college savings plans available.
New York's 529 College Savings Program
The best 529 plans (also known as qualified tuition plans) combine low costs with strong long-term performance. While anyone can invest in New York’s 529 Savings Program, it provides excellent tax breaks for New York residents.
Ohio CollegeAdvantage Direct 529 Savings Plan
The Ohio CollegeAdvantage 529 Savings Plan offers a diverse array of investment options, making it one of the highest-rated for both in-state and out-of-state residents.
NextGen College Investing Plan: Client Direct Series
The NextGen College Investing Plan based in Maine is one of the best for both static and age-based savings options. It even offers matching grants for qualifying accounts.
Michigan Education Savings Program
Wasik notes that “the lowest-cost plans have two things in common: no annual fees and very little in the way of other expenses.” The Michigan Education Savings Program is a great example of both, making this one of the best college savings plans out there.
California-based ScholarShare 529 is one of the best college savings plans with low fees and a diverse selection of investment options.
Wasik recommends starting the search in your home state, which is likely to offer the best tax breaks (specifically for in-state residents). Wasik says, “Although you can invest in any state’s plan, you may get a write-off on your state income tax if you choose your home state’s program.” ■
Now that you know some of the best college savings plans, explore and compare others.