There are a number of investment accounts you can use to save for a child's education. These accounts differ significantly in features and benefits. Two accounts many investors consider are the 529 College Savings Plans and an UGMA/UTMA account.

529 College Savings Plan
529 Plans are federal tax advantaged Plans designed specifically to pay for qualified higher education expenses. Qualified distributions are federal income tax free.

Uniform Gifts to Minors/Uniform Transfers to Minors Accounts (UGMA/UTMA) Account
A custodial account invested in the child's name. Funds can be used for any expense for the benefit of the child, not just school, and the child ultimately controls the account, usually by age of majority (depends on state UGMA/UTMA statute). A portion of withdrawals are taxed at the child's rate.