The average American student is $28k in debt, here's what parents can do to help

A 529 plan offers a way to head off college debt by giving families a tax-advantaged way to save and invest for college, or even pay some costs in advance.

You have lots of 529 choices. Here's what you need to know to pick the right plan.

Savings vs. prepaid tuition

When shopping for a 529 account, you'll need to make a couple of big decisions. The first is whether to go with an education savings plan or a prepaid tuition plan.

Education savings plans allow family members to put money away for a future student's tuition, fees, room and board, textbooks and other qualified higher education expenses.

You grow the money by selecting a portfolio of mutual funds and other investments. The earnings are usually tax-free, but you'll want to see what a plan's disclosures say about fees, because those can reduce your savings by 10% or more.

With prepaid tuition plans, you make payments toward future tuition and fees at participating colleges and universities — at today's prices. The savings can be huge.

But if the kid ultimately decides to go to some other school, you might lose part of your investment. So, some experts suggest using prepaid plans only when children are old enough to know which schools they're likely to attend.

In-state vs. out-of-state plan

The other big choice is where to open your 529 plan.