If you still have a few years to save for child's education, consider the completely tax-free (as of 2002) "section 529" college savings plan created by Congress in 1996. These plans are not available from Source 1, but they should be considered by anyone planning to finance a college education.

Section 529 plans are very flexible. The money in a Section 529 investment plan can be used for college expenses at any accredited college in any state. By contrast, prepaid tuition plans work best with in-state schools because most plans don’t credit a large cash-value buildup to these accounts. And Section 529 plan assets can easily be transferred between family beneficiaries. If one child doesn’t use the money for college, you can easily designate another recipient -- even a cousin, or a niece or nephew. Grandparents who set up the plans can switch the money between grandchildren. Or you could set up your own plan and later transfer the assets to your child.

Section 529 plans offer control. If you save for college using Uniform Gifts to Minors Act (UGMA) accounts, parents lose control over the money when the child reaches the age of majority at age 18 in most states, 21 in others. You may have been saving for Princeton; she may buy a Porsche! With a Section 529 plan, the giver retains control over the assets until they are distributed to pay for college.

Section 529 plans have estate tax advantages. Although most plans will be started with small initial investments and regular contributions, the law allows one-time gifts of as much as $50,000 to a Section 529 plan. (See my colleague Ginger Applegarth’s column “Do’s and don’ts for the estate-tax game.”) The giver can aggregate five years of the allowable $10,000 annual gift-tax exclusion to jump-start a Section 529 investment plan. Wealthy grandparents might consider making a large gift to get cash out of their estates -- if they aren't worried about needing the money for their own expenses as they age. (Or unless they’re worried the grandchild will be a dropout, uninterested in college.) Because the donor retains control over the gift, it can be taken back at any time after paying a federally mandated 10% penalty.

Section 529 plans have financial-aid advantages. Assets in these plans are not considered a student asset in the formulas used to determine financial aid. By contrast, assets held in UGMA custodial accounts are considered student assets -- and are counted seven times more heavily in the financial aid formula when you fill out the dreaded FAFSA (Free Application for Federal Student Aid). Until the 2001 legislation, withdrawals from a Section 529 plan might have been considered income to the student. But now that withdrawals can be made tax-free and no 1099 form is sent out, withdrawals have no effect on a student's assets. Moreover, if the grandparents have established the plan, it need not appear even as a parental asset on the FAFSA form.

Section 529 plans have no limit on parental income. Many other college savings plans either limit the amount of contributions each year or place restrictions on parental income. Section 529 plans have very high limits: a one-time $50,000 contribution per donor, and state-imposed maximum total contribution limits that range as high as Rhode Island’s $246,000 (although earnings can grow the account beyond that amount). And the contributor does not have to be a parent, grandparent or even a relative. You can make a contribution for any living beneficiary who plans to attend college. If you’re an adult and plan to attend law or medical school, you can contribute your own savings to a Section 529 plan. If you don’t use the money, one of your future children can. And if a child wins money in an accident or medical settlement, some of that money could be deposited to grow tax-free in a Section 529 plan, as long as the settlement allows.
Excerpt from http://moneycentral.msn.com/articles/family/college/4764.asp

Section 529 plans can be financed. If you are considering a 529 plan, you may want to obtain a Mastercard which deposits rebates directly into your 529 plan of choice.

Bel Air Capital can also help by restructuring your current mortgage to lower your payments, freeing up extra money to make monthly plan contributions.

To lower your mortgage payments, please click here.

If you are a financial aid counsellor, please contact me to arrange financing for your clients or to obtain a listing on this site.