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More than 1 way to save for college

Savings bonds aren't the only way to save for college. Here are some other investments financial planners recommend to parents concerned about paying big tuition bills in the future:

Certificates of Deposit. Bank CDs, bought in the name of the child, are ideal for those who want to generate taxable income. They generally pay a higher interest rate than savings bonds.

Mutual Funds. For young children, mutual funds that invest in stocks offer the opportunity for long-term gains. However, more conservative investments are recommended for children who will be going to college in just a few years. Many funds make investing easy with automatic monthly transfers from your checking account.

Florida Prepaid College Program. If you are certain your child will go to a university or community college in Florida, this state-guaranteed plan offers you a chance to pay the tuition now at today's prices. You can even prepay dormitory fees. Best of all, if the child doesn't go to college in Florida, the money is refunded, but without interest. Program officials are working on reciprocal pacts with other states that have similar programs. The next enrollment period will be in September, with information and application forms available at any Barnett Bank office.

Zero Coupon Bonds. These are bonds sold by securities brokers, purchased at a discount and redeemed at face value. By buying bonds that mature during your child's college years, you'll have access to the money when you need it. But unless you hold the bond to maturity, bond market fluctuations could mean a loss if you have to sell it in a pinch. Another big drawback is that taxes have to be paid yearly on the growing value of the bonds even though the increased value is only on paper. That makes tax-exempt zero-coupon bonds attractive. However, taxable bonds may be a good choice for children 14 or older because of federal tax rules.

Trusts. A minor's trust, known as a 2503(c) trust under the IRS code, allows the first $5,200 in taxable income the trust earns to be taxed at the minimum 15 percent tax rate as long as the income isn't distributed to the child. A lawyer should be consulted to set up a trust.

Insurance Products. Investment earnings are allowed to grow tax-free as long as they stay inside an insurance wrapper, such as an annuity or a variable life insurance policy. The money is taxed when it is paid out. These products are sold by insurance agents and brokers.

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