In most cases, that's much lower than yours, unless your child launches an Internet start-up in his sophomore year. Best of all, you can use the money for any qualifying college in the country. If Junior decides not to go to college, another member of your family can use the money. John Waggoner's Investing column should have said that assets in Section 529 plans belong to the parent, not the student, which makes it easier for the student to get financial aid. Most colleges consider Section 529 money as belonging to the student, not the parent, which makes getting financial aid easier.
Many states offer additional incentives to parents.
And if residents use the money for qualified educational expenses, the earnings are free from New York state income taxes. In Minnesota, the state will match some of the money residents contribute to their accounts. A Complete Guide to Section 529 Plans . If your state doesn't have a Section 529 plan, or if you don't like your state's plan, you can invest in another state's plan. You won't get any state tax deductions, but the other benefits are the same.