Help figuring out college fund!?

[ewp11100]

We have always been a low income family. We are trying very hard to put both dh and I through college. We bought a house last year and FINALLY got our taxes back. I will not let a red cent be spent until we take most of it and deposit it into retirement and college funds (we have nothing for each yet). We have figured out the retirement but need help with the college funds.

there are 3 options
529 plan:Maryland College Investment Plan
Opening an account now gives your money more time to grow tax-deferred, to help you be ready for rising tuition costs. This is an investment plan that’s specifically designed to help you save for college. Money from the account can be used at almost any private or public college nationwide to pay for tuition, housing, books, and other eligible expenses.

529 Plan: Maryland Prepaid College Trust (MPCT)
•Locks in tomorrow’s tuition at today’s prices
•May be used at nearly any college nationwide
•Starts with as little as a one semester plan
•Backed by a Maryland Legislative Guarantee
•Flexible tuition plans and affordable payment options

OR a long term CD

We can't seem to get anyone at the bank to talk with us they just try to hand us over to Merrill Lnych and they can't do any thing with the little amount of money we have to invest. What have you choosen and why? Please help!

[sewaneecook]

Here's some good info on 529s: http://clarkhoward.com/liveweb/shown.../7/76/215/381/ It appears that maryland is on the "good" list!

Overall, a good 529 plan will have better interest rates than a CD will. However, the 529 has more risk. I opened a Georgia 529 for both my kiddos last month. Be sure that with the plan you choose you don't have to contribute a certain amount each year or that there are a lot of fees associated with it. I think the Ohio plan doesn't have many fees and the Utah plan is rated very highly as well.

[lunarlady]

I did a 529 for my daughter, and sort of wished I hadn't put the money there. I just don't have as much control over it as I would have liked. For example, you can only change your investment options and/or move the money between their different funds once a year. Not good in our economy! I don't know about your state's plan, however, so it might be different.

We opened a trust for my daughter. Sort of funny that she is now a trust fund baby even though we are struggling to make ends meet. But it is good because we have full investment control over it.

[sewaneecook]

An Educational Savings Account (ESA) provides the same tax exempt status as a 529, but allows for more investment options. However, there is a max of $2000 per year and can only be funded until the child is 18. That's another option to consider. I drove myself batty doing research on this decision recently.

[mommyjoy]

this is great info as we are getting ready to open a college fund for my daughter. We currently have very little in retirement for ourselves. I am currently doing research and the info is overwhelming.