Historically, stocks have gained more than 10 percent per year, and in the past 20 years that figure has been closer to 15 percent. With 10 years or more until you need the money, most financial pros would recommend keeping at least three quarters of your college kitty in stocks, and preferably growth-oriented accounts. Retirement accounts are among the few places to put money that won't affect your ability to qualify for need-based aid. You can usually borrow against the accumulation, or in the case of an IRA, make penalty-free withdrawals to pay for education. Don't Save in Your Child's Name.
Trusts are no good either.
The only caveat is to watch Congress in the years ahead. The rules may change. It's a lousy deal in its current form. Just as bad, these funds may be considered student assets - and thereby run afoul of the 35 percent rule for funds held in the student's name. Stay tuned to see if changes are forthcoming.