2. Savings Bonds

Savings bonds are a low-risk investment since they're guaranteed by the government. The interest you will earn is rather low, but the peace of mind of having the guarantee might be worth it to you. They're also federal tax-deferred and state tax-free and can be redeemed federally tax-free for qualifying higher education purchases. However, savings bonds do have a maximum investment of $10,000 per year, per owner, per type of bond, meaning that if you're saving more than that, you'll have to rely on more than just savings bonds. Savings bonds also are subject to federal income tax when they are not spent on tuition and fees.

3. 529 Plan

529 Plans are savings plans sponsored by state governments. Their biggest benefit is that many states will let you deduct your contributions from your state income tax, and the money won't be taxed when you withdraw the money for college. Depending on the state plan selected, maximum investments can be over $500,000, making it great for saving big chunks of money for college. 529 plans are also great for receiving financial aid since accounts owned by dependent students are treated as parent assets. That means they don't have to be reported on the FAFSA when the funds are withdrawn to pay for college.

4. Roth IRA

Roth IRA accounts are most known as retirement accounts, but they don't have to be used for retirement. They can also be a great way to save up for a child's college education. That's because the usual 10% early withdrawal penalty on earning is waived when the funds are spent on qualified higher education purchases. It's also not counted on the FAFSA, making it a great way to ensure that your child will still qualify for financial aid. The maximum investment allowed is $5,500, however, and withdrawals from the Roth IRA to pay for college are counted as a base-year income on the FAFSA.

5. Coverdell ESA

A Coverdell ESA, or Education Savings Account, offers tax-free withdrawals to pay for qualified higher education expenses. It has a lot of investment options available, and even if your student's name is on it, it will count as a parent asset for the purpose of the FAFSA. You can even use the Coverdell Education Savings Account to pay for costs like room and board, making it great for making sure that a dorm room or on-campus apartment can be covered. Just make sure that the fees get used before your child turns 30, or there may be tax penalties.

6. Custodial accounts

Custodial accounts are also called UGMAs or UTMAs, standing for Uniform Gift to Minors Act and the Uniform Transfers to Minors Act. Custodial accounts aren't necessarily exclusively for higher education costs, so you can use them on whatever your child may need for school. There's also no limit to how much you can invest. The catch is that once the child recipient is 18, they come into control of the money and can use it for whatever they want - even if they don't want to spend it on college! Custodial accounts are also counted as student assets on the FAFSA, which means they can reduce a student's aid package by 20%. If you're planning to rely on a lot of financial aid, that might not be the best fit for your student.