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You might want to check out the new so-called "529 Plans" for saving for college. These are also known as Qualified State Tuition Plans (QSTPs), and are sponsored by individual States. Some of these are basically prepaid tuition plans (which I'm not impressed with). BUT... here's where it gets interesting...MANY of the newer ones offer savings-type plans that offer significant tax advantages AND permit you to use the funds for ANY college, ANYWHERE. Also, many of these plans are open to non-residents. In other words, I, who lives in Pennsylvania, could open a 529 Plan from Delaware, and then send my child to a school in New York state (or wherever). (Disclaimer: Not all state plans are open to non-residents. BUT..the vast majority seem to be). Anyway, some of the benefits that appeal to me, at least are:

* Tax-deferred savings until withdrawals begin (like an Ed IRA)

* Withdrawals are taxed at the BENEFICIARY's (i.e. child's) tax rate

* YOU own the account and can change the beneficiary at any time (in case junior decides NOT to go to college)

* There are NO ANNUAL LIMITS to the contributions you can make (unlike EdIRAs, which limit you to $500 per year)

* Federal Financial-Aid calculations do NOT consider the account your child's asset, but rather YOURS (this is advantageous because the formula requires 35% of a child's assets, and only 5% of yours)

* The funds can be used at ANY accredited higher-education institution in the US, and often international ones as well

I am expecting our first child in the next two weeks. (Hence the decision to do some of this research NOW <g>) I am not sure yet just which way we'll go with our savings, but the 529 Plans sure look appealing for a lot of reasons.

Good luck, whatever you decide.

You can get further information on 529 Plans, both in general, and by state, at the following site:

For a great chart that compares the relative features of UTMA, UGMA, EdIRAs, and 529 Plans, see the following page on Fidelity's site (Fidelity administers the 529 Plans for DE, NH, and MA):

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