Cray Anderson says Savings Bonds are an iffy proposition. I can invest something at a rate of 10 percent, take the tax hit and come away with 7 percent and still do better than a Savings Bond. Another option, Cray Anderson says, is zero-coupon bonds. If you know you're going to have to borrow to pay for college, consider a home equity loan because mortgage interest on your primary residence is always deductible, and doesn't phase out at higher income levels. Paying down the principal may be worth thinking about as a savings plan if you think your child will go to a public university because equity in a residence is another category that's not counted for financial aid purposes at public schools.
Private schools can consider that as an asset.
The least attractive option, Raabe says, is an itemized tax deduction. You only get the tax rate times the expenditure. And then there's the floor to consider. You can't take the deduction if the amount is less than 2 percent of your adjusted gross income. But you can't use it to obtain skills for a new career, or to simply improve your level of education.