What to do with 401K plan / college savings

[Guest nathannah]

Hello, my husband has about $6000 sitting in a 401k plan from an employer he left 5 years ago (only was employed there for one year). We recently realized that we really need to start planning for our children's future college education (we have a 2 1/2 year old, a 10 month old, and new baby on the way, and we do plan on having more children later) Rather than dipping into our short term savings accounts to start college funds, we would prefer to roll the money over from the old 401K plan. My understanding is that in order to not pay a penalty, we would need to roll it over into an actual plan, not just invest in mutual funds. Any suggestions on a good plan to roll that 401K $ into for college savings? Also, we don't want the money in the kid's names because it could hurt their chances of receiving financial aid in the future.

Thanks for any feedback!