9 ways to save for college in 2009

If you wait until your child is 6, you'll have to invest $250 per month for the same coverage. And if you start at age 12, you are looking at $350 per month. If these savings targets seem out of reach for you, don't despair. Any amount you can set aside for college now will help to reduce the amount of debt you or your child take on in the future.

8. Keep your retirement fund for retirement 
When it comes time to pay for college, you may be tempted to tap your retirement accounts to pay college bills. But in most situations you will be better off keeping your retirement accounts intact and taking out loans for your child's college expenses.

Distributions from 401(k)s and IRAs will not only hurt your child's eligibility for financial aid in the following year, but they may increase the chances that you become financially dependent on your children later in your life.

9. Use rewards programs to boost your college savings fund 
Everyone likes "free money." Several companies offer rewards programs that link directly to one or more 529 college savings plans. Over time, your purchases can generate rebates that add up to hundreds, and potentially thousands, of extra dollars for your child's college education.

Upromise offers the largest such rewards program. Others include Futuretrust, Little Grad and BabyMint. The Fidelity 529 Rewards American Express Card offers a 1.5 percent rebate on your card purchases for direct deposit to any one of the five Fidelity-managed 529 plans.

Just remember, the programs are "free" only to the extent you don't end up spending more than you normally would for goods and services.


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