If you have high income and assets, you'll be expected to contribute more toward educational expenses than someone with lower income and assets. By saving, you'll be prepared to cover some of the amount for which you'll be responsible.

You may want to take into consideration whose name is on the savings plan or account when you’re getting ready to apply for financial aid.  The federal formula used to determine the family’s Expected Family Contribution takes into consideration certain allowances that offset the total amount of assets owned by parents and the dependent student that would ordinarily be expected to contribute to the student’s cost of attendance.

One of these allowances is the "asset protection" allowance. Generally speaking, assets owned by the parent rather than the dependent student receive a greater asset protection allowance in the federal formula, resulting in less of the asset being expected to contribute to the student’s cost of attendance.

The downside of placing the savings in the parent's name is that the parent may be taxed on the interest.

The best way to save for college will differ from family to family based on individual circumstances. Consider talking to a financial planner if you need additional advice.

In the event your son or daughter already has applied to a postsecondary institution, contact the school’s financial aid office for further clarification and assistance regarding how to report your family’s assets on the Free Application for Federal Student Aid. The financial aid office also can clarify how the federal formula applicable to your family will treat assets reported on the FAFSA.