Sensible-Investor’s picks: sites with the best advice about college savings

Until something better comes along, investors concerned about saving for college should probably check out several sites. So far, these offer the best insights: SmartMoney , T. Rowe Price, Financial Engines and Vanguard . In some ways, they are complementary.

1. SmartMoney: The SmartMoney magazine college-planning site has much to recommend it, although it lacks a comprehensive financial-planning program. That can be remedied, in part, by turning to the Financial Engines site.

SmartMoney’s College

Sensible-Investor goals: 1. Stay sane. 2. Save for kids’ college education, and much more.  A quick introduction to Sensible-Investor. Why most personal finance magazines, television shows and Web sites  give crummy investment advice for people saving for college, and others.  Overview of what  Sensible-Investor has to offer for serious, long-term investors, including those saving for college.

Planning Answer Center offers a few calculators and several useful magazine articles about saving for college, including “Tax-Wise Ways to Save for College” and “How Will You Get There? (First of all, don’t panic.)” Also:

• A valuable interactive worksheet that calculates roughly how much a typical school would expect a family would be able to pay for a college student’s education, based on income, assets and family size. One problem: The worksheet hasn’t been updated, so it still contains references to 1996 and 1997 income.
• An electronic worksheet that takes an offbeat approach, which is less useful than more traditional ones. It calculates “how much you can put away given your current spending,” but doesn’t explicitly encourage thrift.
• Five sample portfolios for parents with children of five different age ranges.

2. T. Rowe Price:This site’s college funding pages are easy to use -- just the thing for a quick overview of how much college money you'll need to save before a child's freshman year, and how close you are to having enough.

The site's calculator tells you how much you'd need to set aside each month, (based on your current savings, expected rate of return, expected tuition expenses, expected level of financial aid, and expected rate of return on your investments between now and then). In case you're .unsure how to fill in any of those blanks, the site offers suggestions.

You're left with the monthly saving target and a recommendation for how to divide your savings among various types of investments. The site makes it easy to place those investments in T. Rowe Price mutual funds, but otherwise doesn't nudge you in that particular direction.

3. Vanguard: The Vanguard mutual fund company has revised its formerly top-rated college-planning site (site currently down) – but not entirely for the better.

These are the site’s pluses:

• Education IRAs have been added.
• You can specify what percentage of your

child’s college costs you hope to cover. A handy “what if” feature; it allows you to see how much money you’d have to save to reach a particular goal, or to see what level  you’d reach if you continue saving at a particular level. Good demonstrations of the effect of changing your allocation of invested assets.

And its minuses:

• A poorly named “Delete Selected Children” button!
• Some apparent glitches in the program. In a trial run, a current-year $30,000 private-college bill, when adjusted for inflation, rose to $39,000 in the year 2009 and to $157,000 in the year 2010.
• Inadequate information about financial aid.
• Information on costs of college has been updated, but still is inaccurate (too low) for top-of-the-line private colleges.

Saving for college planning is now just one component of an overall Vanguard Personal Planning Center, which also covers Retirement Planning, Estate Planning, Investment Planning and a combined comprehensive "Total Planning." It's free for non-customers, but you’ll have to become a Vanguard account-holder if you want to save the data you enter and come back to it later. (July 1, 1999)

4. Financial Engines: Founded by Nobel Prize-winning economist William Sharpe, Financial Engines will analyze your portfolio for free by simulating thousands of scenarios for future years’ interest rates, inflation, and returns on stocks and bonds. It’s designed for retirement planning, but you can use it for college planning by entering the starting year of college when it asks for your planned retirement date.

5. Fidelity: This site’s college section mostly pushes Fidelity’s own investment products, but  it has a useful chart (labeled a “Comparison Table”) comparing and contrasting various college saving programs such as UGMA, UTMA, Education IRA, and 529 Plans (which are offered by many states, although Fidelity focuses only on three states’ plans that Fidelity runs).

6. Consider the tax-saving advantages of a 529 Plan. Sensible-Investor’s own page about 529 Plans lists several helpful sites for you to check out, though the task of choosing remains difficult.

Need financial aid? For information, check out these financial aid links.

College planning in context: College savings should be part of a comprehensive investment program. Two places to start are Sensible-Investor’s Principles: You Can Understand Personal Finance and its lists of best sites.

Other sites? Know of other college-planning sites you’d recommend? Please suggest them.