COLLEGE EDUCATION Q & A

A: With the cost of college and technical schools on the rise, the sooner you can begin saving for your child's future education the better.

For example, according to the figures on a cardboard calculator from American Century, if your child is age 5 today, the average cost of a four-year in-state college education when he or she is 18 is projected to be $88,662; out-of-state four-year college education's are estimated at $132,143; and private college costs could run $192,221. Those figures are based upon a 5 percent annual increase in the costs of tuition's, fees, room, board and other expenses over the years.

To have $100,000 by the time your child is 18 means making monthly investments of $315, if the average annual return on that investment is 10 percent. Or $425, if the money is earning you 6 percent per year, according to American Century.

While making a three- to four-hundred dollar a month investment for one child's future education might sound like a huge nut to crack or even be impossible, particularly when you're young and just beginning a family, don't let those figures blow you away. Instead, think of them as cost-of-living guide posts that show, in black and white, how the costs on everything typically rises over time.

Then understand that any regular monthly contribution you make to an investment program, whether it be $50 or $500 a month, is a good habit to get into. And, that while the cost of a future education may look huge today, you won't need that entire amount all at one time. So don't let the figures scare you out of saving for the future.

Although there are a number of ways to save for college, from merely earmarking the monies in an account you've opened to setting up accounts specifically for your child, here's a thumbnail overview on three popular long-term educational investment programs available. Please note there is much more to these programs that outlined, so make sure to do more homework:

- UGMA/UTMAs. These are Uniform Gift or Uniform Trust for minor accounts and are set up in a child's, i.e., the minor's name, with the custodian, i.e., an adult, in control of the money until the child reaches the age of majority in their state.

What's great about these kinds of accounts is that monies in them can be used for anything---from a college education to the down payments on new cars, homes, or whatever---once the child becomes an adult. There is also no limit on the amount of money that can be invested in them each year, as there would be if you were opening say an Education IRA. On the other hand, each year there may be tax consequences on the account. Also, some earnings may be exempt from federal income tax, and some taxes at the child's or their parent's rate.

- State 529 Plans. Named after the 529 section of the Internal Revenue Code, monies in these accounts are earmarked to pay expenses at qualified colleges and institutions.

One nice thing about these programs is that the monies in the accounts can be transferred to another member of the family. So, if the child this account was originally set up for decides not to go to college, monies can be used to fund another siblings education.

As for taxes on earnings in these accounts, they'll be deferred until the monies are withdrawn.

- Education IRA. Decide to open an Education IRA and you're only able to contribute $500 per year to it until your child is age 18. And, eligibility begins to phase out if your adjusted gross income is $95,000, or $150,0090 for those filing jointly.

When it comes time to take this money out, because you've paid taxes on your dollars before investing them, it comes out tax-free. However, don't follow the rules regarding this account and there may be penalties to pay.

Like the 529 Plans, these accounts are transferable to other family members. One thing to keep in mind, if you'd like to set up both an Education IRA and a 529 Plan for the same child, you won't be able to make contributions to both in the same year.

For more information about college education costs and planning, American Century's nifty cardboard calculator is free for the asking by calling 1-800-345-2021, weekdays 7 a.m. to 7 p.m., Central time; the Federal Student Financial Aid Information Center's toll-free number is 1-800-433-3243, weekdays 7 Am. to 7 p.m. Central time and their Web site address is www.fafsa.ed.gov. ; and, check out www.collegeboard.org to learn more about the college costs.