1.

Understand the federal and state tax benefits of the different plans you are considering. Since tax law can be complex, and every family's situation is different, we recommend that you consult a tax advisor to aid you in your planning process.

2.

Be aware of plan limitations and restrictions. It is difficult to plan for every scenario, but it is wise to research what could happen if things change. What if your child does not pursue higher education? Are you penalized if your child chooses a school that outside of your plan's parameters? Carefully review your education savings options to find a plan that offers the flexibility and control you feel you need.

3.

Consider plan fees and expenses when evaluating your options. Even small differences in fees and expenses can translate into a large difference over time.

4.

Remember that you may participate in a 529 College Savings Plan sponsored by any state, regardless of your state of residence. It is likely that your home state's plan may offer special benefits to residents, but you may find reason to enroll elsewhere.

5.

Keep in mind that you may invest in more than one type of plan if you find that it makes sense for you. Investors can simultaneously contribute to a 529 College Savings Plan, a Prepaid Tuition Plan, and a Coverdell ESA if they so choose.

6.

Find out at the contribution limits for each plan type to ensure that you will be able to put away the amount of money you would like each year.

7.

Know that your financial aid eligibility may decrease as your savings increase. As with any investment, saving for your child's education may impact your eligibility for need-based financial aid in the future.

8.

Seek the advice of an expert. Saving for your child's future is an important part of your family's financial plan. Find a financial planner or tax advisor who can help you create a savings and investment strategy that best fits your goals.