Consumer Reports picks top 529 plans. If you have a little spare cash to squirrel away for college, you’ve probably given some thought to those state-sponsored, tax-advantaged 529 plans. But with over 50 to choose from, where do you start? How about right here, with some tips from the Consumer Reports Money Lab. The blue-coated boffins picked their five fave funds, paying particular attention to those that offered “below-average fees and an investment strategy that was sufficiently aggressive in the early stages and appropriately conservative later on.” Oh, and parents, here’s another tip: You can usually change the beneficiary on a plan to another family member. So, if you were saving for Johnny and he goes deadbeat after high school, you can pass his cash along to Janie. Or just use it for yourself. Admit it: you always wanted to ditch it all and go to film school, right? [Consumer Reports Money Adviser]

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  1. MikeF74 says:

    Well, I just entered my kids info into the calculator… then I almost threw up.

  2. sanjsrik says:

    funny, i used to have a NJ best account. until today. My gods, they were rated one of the worst out there.

  3. thetango says:

    Just a hint to fellow Consumerists who want to invest in a 529. I’ve noticed that many states (including my own) now have a pre-pay plan for state colleges.

    For example, [www.mefa.org] in Massachusetts lists 40+ universities including some private ones (Emerson comes to mind).

    I ran the numbers a few years ago, comparing what I spent on university versus what a semester of university costs now — now matter how I crunched the numbers I found that the pre-pay plan was the better way to go.

    Of course, in doing so I’ve limited where my child might go to university. OTOH, most (all?) 529 plans will be outpaced by the rate that a semester costs …

    • MikeF74 says:

      @thetango: I’ve researched the Maryland pre-paid plan. You’re really not limited to where your child can go, as you can opt to use the money toward any out-of-program school. In that case, in MD, they would give you the same amount as the average weighted tuition. Basically, a cash-out option. So really, you’re not limiting your child’s future education. You’re just pre-funding a good baseline education, and can always upgrade if needed.

      Be advised, the pre-paid plans are at a yearly interest rate (if you’re not paying lump sum). MD is 7.5%.

    • sanjsrik says:

      @thetango:
      1. Relies that your child (mine’s 5) will GO to said college.
      2. Relies on the fact that the child will get IN to said college.

      They going to give you the money back if either of those are not met?

  4. MostlyHarmless says:

    Good thing you said “deadbeat”. I was afraid you’d say “suppose little johnny kicked the bucket”…

  5. winshape says:

    Another little nugget of wisdom: You can always finance college, you can’t finance your own retirement (or depend on social security for that matter). So make sure you are putting a good amount towards your own retirement.

    Besides, your kid will appreciate it more if he/she doesn’t have a free ride. :)