New Way to Save

State college-saving plans offer tax advantages to all and can be used at any school in the U.S.

The best college-savings program you never heard about keeps getting better. As you think about year-end tax moves, consider dropping some cash into a state-sponsored plan where money for college grows tax-deferred and may garner a fat state income tax exemption as well. This plan is relatively new and often gets confused with more common prepaid-tuition plans, in which you pay today and attend later--removing worries about higher tuition in the future. Savings plans are vastly different and in most cases superior because they are more flexible.

Prepaid plans offer tax advantages, and some are portable, but many still apply only...

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