• Saving for college can be difficult.college"s building image by Leonid Tarassishin from Fotolia.com
  
  One year of college may cost far more than the average person can afford, particularly if your child is headed to a top university. Sure, loans and grants are available to help ease the burden, but much of the responsibility can fall on the parents. Also, tuition rates are going up faster than inflation, which makes college that more expensive over time. That makes it all the more vital to start making smart investment decisions.
  
  

Start Early

• Begin making regular contributions to your college fund soon after the child is born. At about a 10 percent growth rate per year, such an early contribution to the fund will be about five times larger than a like amount put away the year before you need the funds.
  
  

Start Aggressively, Then Slow Down

• In the earlier years of your college savings program, you can take more risk than you otherwise would because time is on your side. For example, say there's a recession when you are several years from needing the funds for tuition. You will have enough time to recover from such a downturn in the market. Then, as your child nears college age, switch to more dependable assets such as insured deposits at your bank or short-term Treasury obligations.
  
  

Do Yearly Reviews

• You'll need to check both your strategy and your investments in your college fund at least once each year. It may be necessary to sell certain stocks and buy others because your distribution may have been affected by the rise or fall in prices. Also, you may decide to alter your strategy. For example, it may make sense to you to replace certain securities in your portfolio with more conservative ones if your child will shortly begin college because you can less afford a sudden downturn in the market.
  
  

Section 529 Plans

• States have created 529 Plans that, with some limitations, are exempt from federal taxes, and many states have also passed laws exempting such funds from state income taxes. In addition, some states allow you to lock in tuition rates at that state's public colleges and universities. States offering such a plan require that you make a contribution equal to the current tuition, or agree to make installment payments, and they may also base it on the age of the potential student. This is a huge benefit considering that tuition has increased faster than most people's income.