Best savings for college

[Balco9]

I have two children under 4 years old. Where would be the best place to invest for thier future. Is it in 529's or stick with mutuals funds.
I heard from Vanguard 529 plans that Utah Educational Savings Plan (UESP) Trust(UT) was a good choice. Doe's anyone know about thsi plan or have a better way to invest in my child's future. Thank you so much...
I live in Washington, but don't think it matter's what State.

[atomicrc11]

Well, the Washington State 529 is called GET, Guaranteed Education Tuition. For every 100 GET points you buy, you are guaranteed your child will get 1 years education at any Washington State public University. That isn't a bad deal, seeing as though 1 GET point this year is $74. You can buy 1-500 GET points per year, so essentially, if between now and when your child wants to attend school, if you save up 400 GET points, they get 4 years education that you have pre-paid for. Not too bad a deal. The GET point price changes yearly so in the future they will cost more, but it is a pretty cool program.

Most other 529 Plans actually invest in mutual funds, so you can lose money and hopefully have you money grow at a rate that is higher than inflation. The advantage to some 529s for each state is they let you deduct the contributions from state income tax, but that doesn't apply to you. If you're looking to go the mutual fund route Fidelity and Vanguard have 529 plans that anyone can enroll in and the earnings are still tax free if you use them for education expenses. Pick the plan you are more comfortable with. If you're not comfortable investing, the GET plan may be best as you will most likely be able to accrue enough points to send your child to school for 4 years.

[disneysteve]

savingforcollege.com is a great site to learn all about your options and explore and compare the various plans. First thing is to find out if your state offers a tax deduction for contributions to the state plan. If so, that is generally the best way to go. If they don't, then you are correct that Utah has the top-rated plan for out-of-state residents.

If you choose a tuition prepayment plan like the one atomicrc11 mentioned, make sure you understand what happens if your child chooses to go to school in another state.

[disneysteve]

That sounds good depending on how you have your assets spread among those funds. Is it an age-adjusted portfolio that will rebalance as your child gets older? That's how I have my daughter's.

[Like2Plan]

Well, the Washington State 529 is called GET, Guaranteed Education Tuition. For every 100 GET points you buy, you are guaranteed your child will get 1 years education at any Washington State public University. That isn't a bad deal, seeing as though 1 GET point this year is $74. You can buy 1-500 GET points per year, so essentially, if between now and when your child wants to attend school, if you save up 400 GET points, they get 4 years education that you have pre-paid for. Not too bad a deal. The GET point price changes yearly so in the future they will cost more, but it is a pretty cool program.

.

Just to clarify, 100 units guarantees to cover one year of resident undergraduate tuition and state-mandated fees at the most expensive Washington public university, either the University of Washington or Washington State University.
For the 2007-2008 academic year, the payout value of one GET unit is $62.90. (100 units are worth $6,290) If your student attends another less expensive college, the money left over after paying tuition and fees can be used towards room and board and books (or any qualified higher education expense).

Link to Washington GET FAQ

I purchased GET units for a niece and I think the Washington State program is better in some ways than the Virginia prepaid program we purchased for our DS. The payout for GET is the same no matter which college you attend--ie you get the same benefit if you go to a private college or an out of state college. ( The VA prepaid plan pays out much less if you don't attend an in state college )

[Like2Plan]

I wanted to add. The RoR on the GET doesn't seem too exciting. I believe when we first purchased GET units, they were $32.00 each (in 1998). With a current payout of $62.9, the RoR for those units comes out to around 7%.

You have to hold the units two years (or if you have a contract, the contract has to paid off) before they can be used.

I think GET makes sense if you are going to hold the units for a long period of time and you believe tuition increases are going to outpace your other investments.

Or, you could hedge your bets and invest some GET and some in a higher risk 529 mutual fund. When they say, "Your account is guaranteed to keep pace with college tuition and you can use it at nearly any public or private college in the country." The guaranteed part gets my attention.