There are so many ways to get better return on your investment dollars. Your return on your money in these prepaid plans is what tuition is going up a year, typically 2 to 4 percent at public universities. Considering how the market is performing, I don t think that is the best use of money. He thinks investing in mutual funds is a better idea. Friedhoff also has purchased stocks for his own children as a way of paying for college.
Education IRAs are another way to go.
One problem is they must be used for this purpose, or they will be taxed. There also has been a loosening in the rules for traditional IRAs, which makes investing for college easier by allowing for penalty- free withdrawals, Bent said. People can also look to securities, mutuals and stocks as other saving avenues, she said.