Parents of newborns have plenty of touching moments to look forward to, but at the end of the line there’s a big bill waiting for them.

Parents of newborns have plenty of touching moments to look forward to, but at the end of the line there’s a big bill waiting for them.

That would be the eye-popping figure that by the time those kids are 18, a College Board report estimates, the cost of four years at a public university is expected to ring up at some $177,000.

Obviously that’s not a sum that most parents can just put onto a charge card or write a check for, so that means preparing — starting sooner rather than later.

“Like anything, it’s wise not to procrastinate too much and at least get started, even if (parents) look at these numbers and it blows them out of the water,” said Cal Lyons, a financial consultant with East Peoria, Ill.-based John Graham and Associates. “As in any situation, the earlier you start … the more advantage you have in terms of reaching a higher savings through compounding of interest and rates of return, or just market growth and dividends.”

The reality, says Lyons, who used to work on the other side of the table in higher education, is that “college costs are real and they keep increasing.”

Faced with turning that daunting number into something manageable, many families choose to consult financial planners.

But with or without them, there are a host of questions to ask, from whether or not other relatives might be contributing to whether or not parents plan to pay the full way or just help out. Those questions, Lyons said, help to clarify not just the broader question of how much is needed, but what kind of regular contributions are necessary to get there.

“It’s a matter of working the numbers, and that can give you a better idea of what seems realistic for (you),” he said.

That number can change, too.

“What tends to happen is that people who start working toward it usually find they can do more over time,” Lyons said.

There are certainly specific types of savings plans earmarked by the state and federal governments with tax benefits to make it easier to save for college, but, more broadly speaking, people tend to find it easier to save if something — whatever the vehicle — is labeled “college fund” in an investor’s portfolio, Lyons said.

“Ninety-nine percent of the time, if you have an account that’s designated for that, you’re more likely to keep it that way,” he said, rather than mingling it with other funds.

From prior experience, some folks are used to using certificates of deposit, some bonds or other lower-risk investments for college savings, but nowadays “interest rates are so low that people are saying they’re not going to invest in that because you’re not getting hardly any rate of return,” Lyons said.

Others today just carve out a portion of their existing investment portfolio rather than relying upon college-specific accounts.

But for those who do, there are two specific types that people frequently hear about: Coverdell Education Savings Accounts and 529 savings accounts.

The Coverdell permits investors to contribute up to $2,000 annually per beneficiary, with a variety of specific investment plans and strategies for the funds. Distributions are free of federal tax so long as the person using the funds doesn’t claim certain other tax credits.

“They don’t want you to double-dip, essentially,” Lyons says of the restriction.

All investment gains on 529 accounts are free of federal tax so long as they’re used for higher education purposes.

Like most similar investments — Lyons described them as akin to a 401(k) in terms of the variety of options allowed — those putting in cash can pick an asset allocation mixture that works for them, based on how long they have before they’ll be expecting to dip into the account — meaning consumers can be more aggressive at the start and more conservative as they near the finish line to better protect the nest egg.

The 529 accounts also permit donations from other family members or friends, though they’re considered gifts, meaning only $14,000 or less can be put in annually from each other individual before triggering tax penalties on gifts. There are ways to work around that, essentially prorating larger gifts so that, for example, a grandparent can transfer a larger amount of money in but have it count over several tax years.

“There’s some nice potential advantages to that, and one of them is that it gets it out of their (potential) estate and to the benefit of the child without estate tax,” Lyons said.

Chris Kaergard can be reached at 686-3135 or Follow him on Twitter at @ChrisKaergard.