According to the College Board's Annual Survey of Colleges, four-year private university tuition, fees, room and board charges averaged $29,026 in 2005. Public four-year college costs were $12,127, and two-year college costs were $8,100. Even though many four-year college students get scholarships, loans, or grants that cover 15 to 30 percent of their annual costs, the overall costs remain daunting.

In the last 10 years, public and private four-year college costs increased about 2.5 and 2 percent, respectively, above the rate of inflation. If this trend continues, in ten years you can expect that college costs will increase 5 to 7 percent per year — totaling about $50,000 per year for the average private four-year college; $22,000 per year for the average public four-year college; and $14,500 per year for the average two-year college.

So, if you want to pay a large part of your children's college expenses, the earlier you start planning, saving, and investing, the better.

The two best ways to save for your child's education are to open a Coverdell education savings account and/or a section 529 college savings plan. Their basic allowances and qualifications are as follows:

• You can contribute $2,000 each year to a Coverdell account. Funds in the account grow tax-free, and the funds can be spent on almost any education-related expense for your child as soon as she starts first grade.

• You can deposit significantly larger annual amounts in 529 plans earmarked for college expenses. The plans allow new contributions until the account value reaches a certain level that varies by state — most of the lowest limits max out at $235,000; the higher limits max out around $300,000. To retain tax-free status on gains, you must spend withdrawn funds on tuition, room and board, fees, books, supplies, and equipment used for college and graduate school — not for any earlier education expenses.

• You can deposit funds into a section 529 plan that allows you to pre-purchase four years of tuition at today's prices at one of your state's public universities or one of a number of private schools. Deposits are limited to the cost of tuition and required fees for five years.

• Educational savings bonds are a safe, tax-advantaged option, but they typically don't accrue enough interest to bolster savings. Custodial accounts are an option; however, they don't offer tax advantages and can be problematic if your children obtain ownership at age 18 or 21 and squander the funds.

  Using your Roth IRA to fund your child's education is also possible, and it may be reasonable if you are at least age 59.5 when your child attends college. Still, this approach isn't generally recommended because withdrawals from the account are counted by financial aid formulas as parental income and could limit access to additional financial aid. Also, using your Roth IRA may create a situation in which you have to choose between your retirement savings and your child's education.