By Thomas M. Anderson, Contributing Editor November 30, 2006 Next year, Larry Lopez Jr. hopes to study engineering at the University of New Mexico in Albuquerque. His mother, Sandra Leyba-Casaus, has put aside more than $9,000 for Larry's education, which is nearly twice the $4,700 per student that the average household saves for college. HOW ARE YOU DOING? Your Budget Your Home Your College Savings Your Insurance Your Retirement Test Your Financial Fitness But that's not enough for Leyba-Casaus, a bank loan officer who also has two daughters, Sandra Gabriella, 5, and Davida, 9. To keep pace with the escalating cost of higher education, Leyba-Casaus has drastically changed her savings approach. Since Davida's birth, she and her husband, David Casaus, have socked away another $9,000 in 529 college-savings plans. Many parents use 529s as the cornerstone of their college-financing strategy. These state-sponsored accounts let your contributions grow tax-deferred, and distributions are tax-free if you use the money for qualifying education expenses. Your contributions may also be eligible for a state tax deduction if you use your own state's 529. Leyba-Casaus, who lives in Tijeras, N.M., switched her savings to New Mexico's plan to take advantage of the state tax break. Meanwhile, Larry will graduate from Central New Mexico Community College in the spring and plans to transfer to the University of New Mexico. After working in construction to help pay his college bills, he still has the $9,000 his mother saved, which should cover two years of tuition at the university. Advertisement Here are five tips to help you cover your child's college tuition: Contribute to a 529 college-savings plan with as little as $25. Many states offer residents a tax deduction if they use their own state's plan. Kansas, Maine and Pennsylvania let residents take a deduction for out-of-state 529s. Tap relatives. They can contribute up to $12,000 per year (or $24,000 per couple) for each child without incurring gift taxes. Consider a prepaid plan. You can lock in tomorrow's tuition at today's prices. Search for scholarships at www.collegeboard.com. Start at a low-cost community or state college. Your child can transfer after a year or two.