student loans

Saving for college? Try a 529

Over the last 10 years, college costs have increased an average of 5 percent per year. That means, 18 years from now, the cost of an in-state, public school education could hit $100,000. Yikes! If you have kids, it's time to start saving. I'll tell you how. I'm Jean Chatzky, and this is Bankrate Bottom Line.

By far, the most common college savings vehicle is a 529 college savings plan. These accounts are offered by every state (some have more than one), and there's a great tax benefit if you participate. Your contributions grow tax deferred and money used for college can be pulled out tax-free.

When should you start saving? I always advise putting your retirement first -- after all, there's plenty of financial aid for college, none for retirement -- but once you're on track there, putting even a small amount of money in a 529 each month will give your kids a nice cushion. You can ask friends and relatives to contribute, too.

To find the best plan for you, do a search online, comparing plans. Look at investment performance, fees and any benefit -- like tax breaks -- your state offers residents. Then, set up regular, automatic contributions and you're good to go.

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