Also, if your child decides not to go to college, you will not be penalized or lose out on earnings. Consider a qualified state tuition program. States such as New Hampshire allow residents and nonresidents alike to participate in their program and attend college anywhere in the United States. The tax advantage is that the investment grows tax-deferred until the child goes to college and the child will usually be in the lowest tax bracket when income on the accumulated earnings does have to be recognized upon distribution of the earnings to pay for college. Qualified state tuition programs are great for high-income taxpayers and people who want to invest large amounts for their child or grandchild's education.
Some states also offer tax breaks for residents of their state.
If you have appreciated investments, you may want to give them to your child to sell and use for college. However, if your child is going to qualify for financial aid, giving them investments may disqualify them from receiving the financial aid.