Saving for higher education expenses is an important aspect of financial planning for many families, especially as the cost of education has increased much faster than the rate of inflation in recent years.  Computer programs can be used to determine the savings needed to fund future education costs using expected values for tuition increases, inflation, and investment earnings.  

State 529 plans and Education Savings Accounts allow investment earnings to grow tax-free if the proceeds are used for qualified education costs.  Also, the American Opportunity Tax Credit and the Lifetime Learning Credit of up to $2500 per year for qualified expenses can help offset education costs for taxpayers earning less than the phase-out amounts.