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In the year 2010, a bachelor's degree could cost as much as $200,000 and a Masters degree as much as $150,000 on top of that. Most parents of newborn or young children don't even begin to consider saving for a college education until their children are in their teens.

Starting early is your best bet and here's why:

In this case, time is our friend. The longer time span you have, the less you have to save. That's because the longer time horizon you have, the more you can take advantage of compounding. The dollar you save earns interest, and then the original dollar and the interest earn interest, and so on. The longer you can leave this money to grow, the more it will grow for you.

The main sources of financial assistance include:

Scholarships (either from the educational institution or from private foundations);

Financial aid programs; and

Loans (from the educational institution or from the federal loan program)

Unfortunately, the above are not the most cost-effective options. What happens if your child is not eligible for a scholarship? What if your family assets are higher than would qualify for financial aid? Student loan programs are great if you have to use them, but the payments and interest can cripple a new graduate.

Options for 2002:

Some Facts to Consider:

When the financial aid office calculates your family assets, they determine that about 5.6% will be used toward college education. This figure can include your total assets, not just income.

They also consider the student's assets; they assume that 35% will go toward education, which can include savings accounts and other assets.

By setting up these tax differed accounts, you can substantially lower the total considered assets by having control of the accounts in the parents hands rather than the student's.

With 529 accounts, grandparents can help their grandchildren as well as themselves when it comes to estate planning yet they control the distribution among any beneficiaries they choose.

The 529 account holder (i.e. grandparent or parent) can change the beneficiary at any time. So if your eldest child decides not to go to college, the money can be used for your other children or niece or nephew and so on.

The most important point is to start early. If you pay yourself first, somehow the bills will get paid too. But if you don't, then it seems that there just isn't enough in the monthly budget to cover what many people consider "extras".

Related Articles:
Tour Colleges Like a Pro!
State College Savings Programs (Select your state)
Family Financial Resources

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Educational IRA's & 529 Plans