A lot of them are saying, 'This is a long-term account. My kid is young. The plans, offered by nearly every state, allow parents and grandparents to invest in mutual funds that grow tax-free until the money is withdrawn. Then it is taxed at the student's rate.
Some states let investors deduct all or part of the contributions from state taxes.
Besides tuition, Section 529 money can be used for room and board and other college costs. The money can be used at any school in the country. Wisconsin lawmakers recently voted to expand the offerings in the state's college savings program, known as EdVest. For David and Nuala Doty, who live in Madison, investing in a more aggressive account will give them a chance to more quickly build up the college funds they plan to start for their two children. Participants in the EdVest plan can choose from seven investment options.