Saving for college: Tips on 529 plans, scholarships

— -- In the old days, parents celebrated the arrival of a new child by roasting a mastodon. Today, they start a college savings account.

And no wonder: A year of tuition and fees at the average four-year private college cost $28,500 in the 2011-2012 school year, says The College Board. "Back when I went to college, people could pay their own way, but now it's insanely expensive," says Joy Thompson, 42, of Medway, Mass.

So how do you get your child through college? USA TODAY asked readers such as Thompson for tips — and got some great ones.

Start a 529 college savings plan.

"It's obvious that you just have to save," Thompson says. The best way: an automatic investment in a 529 plan. The basics: A 529 plan lets you sock away cash tax-deferred until your child goes to college. While your state may offer tax breaks for investing in its plan, you can invest in any 529 plan in the country and use the proceeds for costs at qualified colleges in any state.

Most states have two options. The first is a prepaid 529 plan, which lets you buy tuition at today's prices. You can apply your savings to out-of-state or private schools.

The second is a savings plan. You get a choice of several investment options, much like in a 401(k) savings plan. If you want advice — and are willing to pay for it — you can invest via a financial adviser. If you're a do-it-yourselfer, you can invest directly in your state's 529 plan. You can find plenty of information about 529 plans at www.savingforcollege.com.

And, if you have a choice in the matter, live in the state that offers the best colleges at the best price. When David Young of Vienna, Va., moved his family from Spain, he chose living in Virginia over Maryland in part because of Virginia's colleges. "Basically, the better state universities in Virginia rated higher than the ones in Maryland," he says. "And there were a broader spectrum of universities in Virginia."

Whichever option you choose, have the money automatically taken from your bank account or paycheck. It's easier to save if you don't have to write a check every month.

Don't be too aggressive.

In theory, the more time you have, the more heavily invested in stocks you should be, because stocks often produce higher long-term results. But the long term flies by quickly, and as your child grows older, you should ratchet back on the risk.

For example, $100 a month invested in the Vanguard 500 Index fund starting in 1994 would be worth $35,973 come 18 years later, according to Morningstar, which tracks the funds. The same amount invested in Vanguard Wellesley Income, a conservative mix of stocks and bonds, would have become $46,100.

History rarely repeats itself: Stocks may well outperform hybrid funds such as Wellesley in the next 18 years. Rather than reach for more risk, consider investing more. Increasing your contribution by just 3% a year would boost your balance at the Vanguard 500 Index fund to $44,453 and your Wellesley income account to $56,436.

Make your children study.

If you go to New York and ask how to get to Carnegie Hall, someone will likely say, "Practice." Want to get scholarship money? Get good grades.