• Start Early
  The earlier you start to save the better. You'll not only save more, but should you choose to invest your savings, you will have more time to ride the ups and downs of the financial markets.

• Know the Costs
  In estimating the costs for your child's education, first determine if you want to save for a public or private university.

Tuition and Fees*

These figures only include tuition. Additional expenses may include room and board, and other out-of-pocket expenses such as books, supplies and transportation. Once you have selected the type of university and estimated the yearly expenses you will be facing, you can start deciding on what types of funding vehicles will meet your needs.

• Section 529 Plan
  529 plans can offer tax benefits unlike other types of college savings programs. Contributions made to a Section 529 Plan grow tax-deferred. Qualified distributions, taken for education expenses, are free from federal income.** Depending upon your state of residence and the plan you own, qualified distributions may also be state income-tax free.*** Each 529 plan has it's own set of rules and restrictions; always check with the plan administrator for plan details.

• Uniform Gift to Minors Account (UGMA/)/Uniform Transfer to Minors Account (UTMA)
  These accounts allow you to invest money in a child's name and retain control of the account until the child reaches adulthood. Up to $11,000 per child per year may be transferred gift-tax free. The first $750 of a child's gross income is not taxed. Depending on the child's age, most or all earnings in excess of $750 can be taxed at the child's tax rate.

• Coverdell Education Savings Account (ESA)
  Formerly referred to as an Education IRA, an ESA allows you to deposit up to $2,000 annually for a child under 18 years of age. The money you invest is not tax deductible; however, funds grow and can be withdrawn tax free if used for higher education. Anyone may contribute to an ESA as long as no more than $2,000 is contributed over the course of a year and the contributor's adjusted gross income is $220,000 or less for a couple ($110,000 for a single filer). The allowable contribution decreases for incomes between $190,000 and $220,000 ($95,000 and $110,000 for single filers). If more than one adult is making contributions to the ESA, the total contributions per child are capped at $2,000 per year. Contributions in excess of this amount are subject to tax penalties.

• Financial Aid
  When the time for college comes, make sure you apply for financial aid. Many families mistakenly don't apply because they don't think they will qualify. It's worth the time to apply. Be careful when you convert any liquid holdings you have used for college funding into more conservative holdings. The capital gains and income realized could show up on your tax return. Since you must submit your previous year's return when applying for aid, try to liquidate investments before January of your child's junior year of high school. There are a variety of different types of loan and grant programs you can apply for which may include: Federal Aid, Pell Grants, State Grant Programs, Institutional Aids, Stafford Loans, Parent Loans, Nonfederal loans.

• Tuition Tax Credits
  To help pay for higher education costs, the federal government offers parents and students tuition tax credit programs: Hope and Lifetime Learning. If you meet certain requirements, you can qualify for a reduction of up to $1,500 on your federal income tax bill. The Hope Tax Credit applies to tuition and fee expenses for the first two years of post-secondary education. The Lifetime Learning Tax Credit is available for all years of postsecondary education and for courses (even a single course) to acquire or improve job skills. For the most up-to-date information on rules and restrictions, visit the Web sites of the Department of Education and the IRS or speak with your legal or tax advisor.