Maybe a Coverdell Education Savings Account

It's another way to save for a niece or nephew, but as always there are negatives.

1) Maximum Contribution of $2k per year. So even with the best investment selections, and if you start within one year of the niece or nephew's birth, it probably won't be enough if they get accepted to an Ivy League university.

2) Because the account is in the beneficiary's name, this will affect how much financial aid is available because ideally, you want these type of savings accounts in the parent's name.

However the advantages are that you are not restricted to the limited investment selections of 529 plans. The few brokers who do offer these accounts generally have little to no annual fees.

Given the few alternatives, it's something for the radar screen.