Saving for a child's college education?

What are the best strategies to save up for my little sibling's college education? My parents are starting to plan now, and we're looking for any advice or savings plans that have worked well for others.

The intention to start saving for your younger sibling's college education is commendable, and it's a critical step towards lessening the financial burden when the time comes. Here are a few strategies you could consider:

1. 529 College Savings Plan: A 529 Plan, to my understanding, has proven to be a popular option for many families. The contributions grow tax-free and can be withdrawn tax-free, as long as they're used for qualified education expenses. Plus, the person who establishes the plan - in this case, your parents - retains control over the assets, even after the beneficiary becomes legal age.

2. Coverdell Education Savings Account (ESA): This account lets money grow tax-free, and withdrawals are tax-free as well if used for qualified expenses. However, keep in mind that these have lower contribution limits than 529 plans and are only available to families below a certain income limit.

3. Roth IRA: Roth IRAs are typically used for retirement savings, but they offer a unique benefit: contributions can be withdrawn (not earnings) at any time without penalty, including for college expenses. So, if college plans change, the money is not "locked in" like with a 529 plan or ESA.

4. Savings or checking account: If your parents would prefer to keep college savings more accessible, they might consider a high-yield savings or checking account. While this won't offer the tax advantages of the above options, it could provide more flexibility.

5. Scholarships and Work-Study: While this strategy might not be relevant right now, once your sibling enters high school, it can be worth considering. Actively pursuing scholarships can significantly offset the costs of college. Work-study opportunities can also help cover expenses while gaining valuable experience. This obviously entails your sibling doing some work, but it can be a viable route to decrease the need for savings.

6. Pay college costs as they come: It might also be possible to pay some college expenses "out of pocket" as they come, especially if your household income is high. This way, you have the freedom to decide how much to spend each year.

Not all strategies will work for everyone, so it's crucial to think through exactly what fits best for your family's circumstances. Consulting with a financial advisor may be beneficial as you sort through your options.