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Eight Great Ways to Save for College - improved state sponsored college savings plans - includes information on online searching for an apartment

Kiplinger's Personal Finance Magazine, Sept, 1999 by Kristin Davis

The newest state savings plans go to the head of the class.

States have been busy since we last reviewed state-sponsored college-savings plans. Six states will offer new plans by September, and two more have improved their investment options. The best news: All the new plans earn As on the scale we used to grade 32 plans in the February 1999 issue ("How to Ace Saving for College").

These states earned top marks by adopting features we applauded in our February survey, such as providing investment options suited to long-term investors and allowing proceeds to be used without penalty at any accredited college in the U.S.

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Investments in the plans shift from an aggressive blend of stocks and bonds when children are young to a conservative mix as they mature. Money grows tax-deferred until it's used for college; earnings are then taxed in the student's bracket. Some states add tax benefits for residents.

All plans levy a penalty on withdrawals not used for college expenses. Unless noted otherwise, any U.S. resident can open an account.

* Arizona's Family College Savings Program is our favorite among the new plans because it gives you some choices about how your money is invested. No plan gives you total control of your investments, but Arizona lets you predesignate up to two switches--say, from SM&R Growth fund (three-year annualized return, 17.5%) to SM&R Balanced fund (12.9%) on your child's 13th birthday, and from that fund to a bond or money-market fund at 16.

Arizona also offers the College Savings Bank's CollegeSure CD, which pays a rate pegged to college-cost inflation with a minimum guarantee of 4%. Whichever you choose, earnings are exempt from Arizona state tax. For more information, call the College Savings Bank (800-888-2723) or Securities Management and Research (888-667-3239).

* California's Golden State Scholar-share Trust (877-728-4338; www .scholarshare.com) invests in three TIAA-CREF funds, including the Growth Equity (12-month return, 26.5%), Bond Plus and money-market funds. For children up to age 2, the mix is 75% stocks and 25% bonds.

* Kentucky has offered only a fixed-rate return in its Educational Savings Plan Trust (800-338-0318), with a minimum guarantee of 4%. Starting this fall, accounts will be invested in the TIAA-CREF funds named above, and only earlier contributions will retain the 4% guarantee. Earnings are free from Kentucky state income tax. Participants must have ties to Kentucky, such as living or working in the state or having a family member who lives there.

* Maine's NextGen College Investing Plan (877-463-9843) invests in nine Merrill Lynch funds, starting with 90% stocks and 10% bonds for children up to age 3. Earnings are free from Maine income tax.

* Massachusetts's U. Fund (800-544-2776) supplements the state's prepaid-tuition plan. Your money is invested in eight Fidelity portfolios.

* Minnesota's College Savings Program (800-657-3866) is a TIAA-CREF plan similar to California's and Kentucky's. Minnesota residents who meet certain income criteria can get a matching grant.

* Missouri's Saving for Tuition (Most) program (888-414-6678) is yet another TIAA-CREF plan that will eventually include a fixed-rate option with a guaranteed minimum return. The big boost for Missouri residents: a state-tax deduction of up to $8,000 per contributor per year. Earnings are free from Missouri tax.

* Vermont's Higher Education Savings Plan (800-637-5860; www.vsac .org) will mirror Missouri's plan, with TIAA-CREF funds plus a guaranteed-return option. Withdrawals will be free from Vermont tax. The contributor or beneficiary must have a "Vermont connection."

For reviews of plans in other states, see www.kiplinger.com/kids.

RELATED ARTICLE: APARTMENT HUNTING ONLINE

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In addition to neighborhood-specific searches, the site offers advice on moving-related topics. Many of the links are essentially online ads. But there are a few gems, such as school reports and crime statistics, plus links to each state's department of motor vehicles Web site. SpringStreet also links to a free change-of-address service that will forward your notice to the post office, credit card companies, magazine publishers and others that you specify.

--ELIZABETH RAZZI

Financial Services Industry

Eight Great Ways to Save for College - improved state sponsored college savings plans - includes information on online searching for an apartment

Kiplinger's Personal Finance Magazine, Sept, 1999 by Kristin Davis

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