In these plans, your money is invested by the state. In most cases, enrollment is not restricted to state residents. Earnings are tax-deferred, and when you make withdrawals to pay for college, they're taxed at the student's rate. The big downside to these plans is that the state controls the investments, so you don't have a say over how the assets are allocated. If you use the money for something other than education, the withdrawals are subject to penalties.
Maximum contributions vary by state.
Federal tax credits. If you decide to use a taxable account to save for college, you may qualify for federal tax credits. If you don't have any money in your budget to allocate to college savings, it may be tempting to draw from your retirement fund. But unless you're one of the few people who have excess retirement funds, it's generally not a good idea. Your child can take out loans to pay for college, but you can't borrow money to pay for your retirement.