When it comes to saving for college, panic shouldn’t be your chief planning tool. Ditto for denial.

No matter your income there are solutions that will make a measurable difference in your ability to pay for college when the time comes. And experts all agree on one thing—the worst thing to do is wait. Start small, but definitely start.

The most popular options for college savings are “529” plans and rewards programs such as Upromise, which also has its own 529 program.

A “529” plan refers to the Internal Revenue Service section that describes this ‘tax-advantaged’ investment vehicle. Specifically, all 529 plan earnings and distributions are exempt from federal tax when used for qualified educational expenses, such as tuition, room and board. It’s important to note that your contributions into the fund are still taxed. State tax breaks will vary.

Upromise by Sallie Mae is not a typical savings plan, but a shopping rewards account where you earn cash back by shopping at retailers, restaurants and other establishments. The account can be linked to an existing debit or credit card or one can apply for the Upromise World MasterCard. You can expect to earn anywhere from 1 to 25 percent cash back depending on seasonal incentives, which can be used toward tuition, student loans or even taken as cash rewards.

How to Contribute

  • Upromise savings and the SSgA Upromise 529 Plan
  • Register on the Upromise website and link your credit or debit card to the rewards program.
  • It’s important to know that Upromise rewards isn’t a savings plan and you will not receive the tax advantages associated with 529s unless you specifically sign up for its plan, Upromise 529.
  • Begin contributing to the SSgA Upromise 529 plan online with as little as $15.
  • The two plans can be linked, so your Upromise rewards can help fund your Upromise 529.

Other 529s

  • There are two kinds of general 529 accounts: prepaid and savings. The prepaid is essentially paying tuition in advance, but there are restrictions that make this less popular, with some states now disbanding their prepaid plans.
  • The typical 529 program works more like a mutual fund. You make cash contributions and the plan holder pools and invests for a rate of return. Like any investment, you assume some level of risk and your rate of return can be positive or negative

For all plans you’ll need your personal information and that of your beneficiary, as well as any bank information for electronic transfers.

Contribution Limits for all 529s

  • According to the Internal Revenue Service, contributions to 529s can’t exceed qualified education expenses and there could be a gift tax issue if contributions exceed $14,000 in a given year, with some flexibility. For more information on gift taxes, read the instructions in IRS Form 709.
  • You can set up a 529 plan for anyone, even yourself. There are no income restrictions or limits on the number of plans. Family members, such as grandparents and friends are also allowed to contribute.

Returns

  • Check a prospective fund’s historical performance but that will not guarantee or predict future results in any way.
  • The website Saving For College recently released its 529 rankings, which analyzed the multi-year performance of 529 funds throughout the U.S.
  • If you are unsure how much you might need to save, use an online calculator that includes your child’s age, your income and whether you plan on a private or public college/university option.

State Deductions

  • Here you absolutely have to dig into the fine print. The Upromise 529 is sponsored by the State of Nevada but does not offer state income tax breaks because Nevada doesn’t have a state income tax.
  • For all other 529s, state deductions will vary considerably.

Rules and Regulations

  • Nearly all 529s have fees. Factor that into your overall investment plan.
  • You must report a 529 plan on the federal financial aid application (FAFSA) as a parental asset (if under the parents’ name).
  • Your specific situation may be unique. Seek the advice of a trusted financial adviser.