They are state-sponsored plans, now available in nearly every state, designed to make saving for college easy. While they do a great job at that, they go even further, offering significant tax advantages. Details of each plan vary from state to state, but 529 plans tend to fall into two broad categories.
Some states have only one or the other, but many have both.
Prepaid tuition plans. These plans guarantee that your contribution will increase in value at the same rate as college tuition. This allows you to lock in tuition at current rates, offering peace of mind from knowing that college costs will never spiral out of your reach. But while you're guaranteed that there will be enough to cover tuition when the time comes, you're also guaranteed that your investment return will be no higher than the increase in tuition. If it turns out that Junior doesn't want to attend State U., no problem.