Saving for college

College costs keep rising. Today tuition at a private, four year college is up 6 percent from last year to $25,000. Public college tuition is up almost six and a half percent. If you haven’t set up college savings for junior—here is your guide on getting it started.

1) The 101 on 529s

These are state-run accounts that allows investment of after-tax dollars specifically for college. The money grows tax-deferred, and it’s not taxed when you take the money out—(if it’s used for qualified college expenses.) Most 529 savings plans offer a menu of age-based portfolios, and some also offer a small selection of stock and bond funds. And 32 states have tax breaks for residents in the state 529 plan. Investment minimums are low: $25 bucks in some cases. And there is no restriction on how much you may contribute every year unless the account is nearing the lifetime cap which can range from $100,000 to $400,000.

2) Watch the fees

Fees have been going down thanks to competition in the industry. You’ll want to choose a plan with the lowest fees—in that case you’ll want to invest in direct-sold plans over broker-sold plans. Direct-sold plans have administrative fees of .3 percent to to 1 percent. Advisor sold plans: fees can be 2-3 percent for administrative fees. As a general rule, you don’t want to pay more than 1 percent administrative fees.

3) Your options

Of course, 529 plans are vulnerable to market forces… and you may already be invested in a 529 that has suffered a significant decline. If your child has 8 years or more before college having 50 percent or more in stocks is still your best bet to grow your money at a rate faster than college cost increases. In 529 plans, you can only change your allocation once a year. If you've already made your yearly allocation change, there are several other things you can do. You can move the account to another state's plan, which will allow you to choose a new asset mix, but only one rollover is allowed in a 12-month period. You can also change the beneficiary of your existing plan, which frees up the account to allow an investment change. There are no restrictions on how often you can change beneficiaries so if you have two children you can switch the account between them as often as you want.

A new year…a new you. Get control of your financial life. From fixing your 401(k) to wiping out debt — Gerri Willis has your guide to financial resolutions all this week on CNN's American Morning.