A great way to start saving for college is to open a 529 College Savings Plan. A 529 Plan offers a a tax-advantaged way to save for college. 529 Plans are offered by states or educational institutions and typically invest in mutual funds. Most 529 plans, regardless of the state who runs the plan, allow you to use the funds to attend any college or university nationwide. The big benefit of a 529 plan is that your contributions in 529 plans grow tax-deferred, and any withdrawals for qualified college expenses can be withdrawn tax-free. In essence you are not paying any taxes on the earnings if used for qualified educational expenses.
Many states also offer state income tax deductions for contributions you make to your own state's plan. Before picking a 529 plan to invest in, check to see if your state offers a tax deduction or not. If so, you may want to invest in your own state's plan. However, make sure you look at the plan fees (if any). A high annual fee may outweigh any potential savings on your state income tax.
The 529 plan allows you to name a benfeciary(even yourself) for the money, but the account owner has complete control over the account. The owner (usually a parent) chooses the investment fund, controls the contributions and withdrawals, and can even change the named beneficiary (once per year). If a account owner names their firstborn as their beneficiary, but he/she doesn't attend college, the account owner can change the beneficiary to another child.
Opening an account is as easy as filling out a few forms and making a contribution. www.collegesavings.org gives more information on 529 plans.
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