One of the biggest expenses your children will incur is college tuition. The cost of further education is continually on the rise. Even with scholarships the costs can be staggering. The amount of federal financial aid granted to undergraduate students in the form of loans is shocking as well. 71% to 93% of middle-income students attending 4-year schools in one study received some type of financial aid during the academic year 1999-2000.

If you have thought about or have even started a savings mechanism specifically for your children's college education, you are ahead of the curve. If you haven't, right now is the time to start.

Paying for an education by using a credit card may be unheard of, it is a possible reality and worth considering especially if you are a young parent. But how can you possibly build a college fund? One way is through a 529 College Savings Fund.

One of the best methods of saving for education is a 529 College Savings Plan. Named after Section 529 of the Internal Revenue Code, 529 College Savings Plans are tuition savings programs exempted from taxation. They were created to encourage families to save money for college and are operated by a state or educational institution. Participants invest after-tax money into the account and the earnings from the money invested are tax exempt.

529 plans are so popular that many incentive programs have been created to help the consumer take advantage of them. Credit cards don't typically come to mind when it comes to saving money, but just as there are credit cards with cash back incentives or air miles programs, there are some credit cards that have incentive programs geared specifically toward educational savings.

There are two types of 529 plans, savings or pre-paid. Both are managed by a fund manager who invests the funds for the account. 529 Savings Plans are operated by states (and all states have one) with the purpose of saving money for any college, even out-of-state schools, your future student wants to attend (although some state plans do place stipulations that the money can be used only for schools in that state, so you should do your research). Pre-paid accounts are run by institutions and allow participants to save and invest money that will go toward tuition at that institution.

The advantages of opening a 529 plan are obvious: it's a tax-exempt fund that helps you put money back specifically for future educational goals. As with any investment fund, the sooner you start the more compounded interest you'll earn.

Consumers can research plans nationwide and invest in the one that meets their criteria as far as best return, lowest fees, etc.

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