The golden rule of college finance still rings true for 2011: Start saving early to maximize the compound interest. According to Bankrate.com's college savings calculator, parents with children age 10, who have not yet started saving for college, will have to fork over $873 per month to finance 100 percent of their child's college costs for one year at a public, in-state school, using the College Board's estimate of $16,140 in tuition, fees and board per year for the 2010-2011 school year.
To meet the same goal of paying for 100 percent of their students' college costs, parents who start saving five years earlier will have to put away $274 less per month, though costs likely will rise, forcing parents to adjust their savings.
Search for select scholarships
The best way to maximize your chances for winning a scholarship is to first apply for those you're most likely to win. According to Kelly Tanabe, co-author of "The Ultimate Scholarship Book 2011," that means applying for federal aid first, hitting up your college of choice for funds, and rooting out awards offered through local organizations, clubs and professional groups.
"You're going to have a much higher likelihood of getting a scholarship that fewer people are applying for," she says.
Hurley adds that low-income families should seek income-contingent awards to lower the competition.
Compare 529 plans
Some plans are soaring; others are still in the dumps. To make sure your 529 plan works for you, Darrell Canby of Canby Financial Advisors tells clients to carefully evaluate several 529 plans' past performance. Also, you should consider investing some funds outside your 529 plan.
"One of the difficulties with 529s is that you're limited in your investment options," Canby says. "You can also only change your investments once per year."
Canby recommends that parents diversify their investments, placing some funds into a 529 college savings plan and investing the rest in other savings vehicles.
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