College tuition rates are rising at record levels. Saving now helps ensure that you or your child will be able to attend college later. Also, the earlier you start saving, the more money you will earn in interest. Starting to save now sure beats having to come up with a large sum of money at the last minute, or having to rely solely on loans to cover costs, or not being able to attend at all!

Here are a series of plans designed to help you save for college tuition:

• The Upromise Program: This is one of the easiest ways to save for college. This program allows you to get a small percentage of money back each time you purchase eligible goods and services that are a part of the Upromise network. Go to www.Upromise.com for more information and to get signed up.
  
• 529 Plans: There are two types of plans –
  
            o College Savings Plan: allows the funds to be used for tuition at any accredited colleges.
  
            o Prepaid Tuition Plan: lets you lock in future tuition at in-state public colleges at their current
              tuition costs.

For both plans, all earnings withdrawn for the purpose of college costs are exempt from federal taxes. For more information about 529 plans visit www.CollegeBoard.com or call the finance office of the state you are interested in.

• ESA (Education Savings Accounts): also known as Coverdell ESA. These accounts are similar to 529s in that the earnings from these investments are tax-free when used for qualified education expenses. Unlike 529s these earnings can be used for elementary and secondary school expenses as well as college. Contributions are phased out for incomes between $190,000 and $220,000 for married joint filers and between $95,000 and $110,000 for single filers.
  
• EE Savings Bond Program: You can purchase bonds at your local bank or from the U.S. Treasury Department. These savings bonds allow parents to collect tax-free interest as long as the proceeds are used to pay for qualified educational expenses. It is important to note that the bonds must be purchased in the parent’s name, not the child’s, if the bond will be redeemed to pay for qualified educational expenses.
  
• IDA (Individual Development Accounts): These are savings accounts especially designed to help people with low incomes. The IDA account holder has a choice of saving for either buying a first home, starting a small business or post-secondary education. The IDA offers an incentive to save by providing matching funds, typically dollar for dollar and in some cases 3:1, contributed by community development organizations in your state. For more information visit idanetwork.cfed.org.

Other ways to fund college expenses

• Financial Assistance: There are different forms of financial assistance to help pay for college expenses. Unfortunately most financial aid given is in the form of loans, which you have to pay back. Contact the Financial Aid office at the school you are interested in to get more information on Loans, Grants, Scholarships and Work-study Programs.
  
• Reserve Officer’s Training Corp.: ROTC offers scholarships and stipends to students who commit to serve in the military. Also tuition is free at U.S. Military Academies. For more information go to www.rotc.com.
  
• Tax Benefits: While you are paying tuition for current college enrollment, you may be able to take advantage of certain tax benefits: Hope and Lifetime Learning Credits or Student Loan Interest Deductions. For more information and eligibility requirements talk to your tax preparer.

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