The child is guaranteed four years of college at a state institution. It works if you hate risk and you're sure your child is going to go to school in state. One criticism of prepaid tuition plans is that families can do better by investing the money themselves, especially if their future graduate is young and there's a lot of time to build up the college fund. Of course, no one knows what the next 10 years will look like. Funds can be transferred, but if they're based on the tuition for an in-state school and the costs are higher at the school your student chooses, you're going to have to scratch to make up the difference.
Savings plans Most of the new state-sponsored plans are savings plans.
They're like mutual funds where parents or grandparents can invest either a lump sum or make monthly installment payments. Many states have turned over the investment management of their 529 plans to reputable investment firms such as Fidelity, TIAA, Merrill Lynch or Vanguard. Every state has its own plan and its own rules. To see what your state is up to, visit the Web site of Joseph F. Hurley, certified public accountant and author of The Best Way to Save for College . Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator.