College 529 Investment Plans

The best way to save for your kids' college during this economic crisis:  529 plans.

Sponsored and administered by state governments, the plans are resilient and relatively recession-proof according to Atlanta-based consumer advocate Clark Howard (

First, they are tax-free, and most do not carry fees or commissions (check your state's terms!).  They earn money tax-free, and families spend them tax-free as long as the money is spent on college costs like tuition and books.  If your child gets a full-ride, his 529 plan can be shifted to a sibling -- also at no tax burden or penalty.

529 plans generally offer age-based portfolios with mixes of mutual funds, stocks and bonds.  "Age-based" means they automatically re-diversify into a more conservative investment mix as your child edges closer to college.

While researching 529 plans, don't just settle for your state's plan.  Some state plans, including Tennessee's, do not offer the flexibility to spend the money on schools OUTSIDE of Tennessee.  They may also limit spending the funds only at state universities -- no private institutions.

Howard recommends the Iowa, Utah and New York 529 plans as the best in terms of low-cost, diverse portfolios and flexibility.  You can read up on his research of these plans by linking to his extensive 529 college plan guide: