Vanguard 529 vs. state 529 vs. MD prepaid college trust

[gbear]

My college saving question: what is the best way to save money for college for a 3 and a 4 year old?

I have been looking at 529s. The MD state one is tax free, but it makes up for it somewhat in increased fees and lower returns compared to the Vanguard one. What I look at more and more is the pay for it now at todays rates deals like the MD prpaid college trust. It is expensive as all get out because it's like paying for college now which will never be cheap. The advantage is it is at today's rates. I keep expecting some general inflation in the next 14 years which would be on top of the inflation of college costs. Am I crazy to think that way? There is a large part of me leaning towards suggesting that we should take the project management slogan to heart of "Take your pain early and take your pain often to make sure there is less of it."

[Predicto]

What exactly is the MD prepaid trust? Does it mean you have to go to a MD state school?

The tax advantage of 529 plans is huge. It doesn't matter what state you choose. I'm in California but I use the Schwab 529 based in Kansas.

[gbear]

No. The MD prepaid can be used for any school or schooling.

It is however tied to the cost of state colleges in MD. So if you prepaid, yo ucan have your full tuition at any MD school paid. If you go to another, you get the average of the MD schools at teh level you selected/aid for. You can opt to pay for 1-2 years of community college or 1 to 4 years of university. So if universities in MD average $40k a year in 14 years when when your kid goes, that's the amount you get toward where ever they go.

The money is put in pre-tax (both state and fed).