college savings

i have posted on here before that sometimes i wake up in a start, worried about the increasing cost of higher education. when i went to school (public state university), i was able to fund it entirely with scholarships. i had a part time job that helped me with expenses. i never asked my parents for any money, nor do i recall them giving me any.

but, since we're expecting, i started researching options for college savings. i actually signed up for a upromise account just this morning, though i haven't filled in all the necessary online paperwork just yet. it amounts to a cash back offer that participating manufacturers contribute to when you buy their products. it's free, so i thought, what the heck.

the other thing that i want to do is open up a 529 plan, that however will have to wait until the little one is born, as i have to designate a beneficiary. 529 plans come in 2 flavors -- a tuition lock program and a savings plan. i'm likely to go with the latter, as it affords the flexibility to put those funds toward any accredited university. i would hate to lock the kiddo into life as a longhorn if he/she really wanted to be an aggie. 529 plans are great in that the earnings are tax-deferred (though, you contribute after tax dollars) when they are used toward higher education, and you have a good deal of flexibility in naming and changing beneficiaries.

ira's are also a nice option, if you qualify, as you can put pre-tax funds into them. i assume that you are able to make penalty free withdrawals out toward education costs, but i didn't look into them in much detail.

again, the magic of compound interest plays a big part here, so my hope is that i'll be able to put a nice bit away on day one and make some small contributions between now and graduation.