How I got schooled on college savings plans

  @FortuneMagazine February 10, 2014: 5:53 PM ET
QUI28 student loans

Is your child eventually going to wish he'd been born in another state? The federal government did a great service 17 years ago when it allowed states to set up Section 529 college savings plans as a way for overwhelmed parents to save for the ever-rising costs of higher education. The money you put in today gets to grow free from any federal taxes until you decide to spend it -- a big advantage that can massively multiply your savings, especially if you start putting money away years before your child goes to college.

But each state runs its own plan, and unfortunately not all college plans are created equal. And if you want to take advantage of any potential state tax benefits, you have to invest in the plan offered by your home state. The result: The plans are an essential monopoly in most states, granted by the state treasurer or other officials to a money management firm. And some state plans are taking advantage by charging oversize fees.

Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.36%4.24%
15 yr fixed3.39%3.26%
5/1 ARM3.36%3.27%
30 yr refi4.34%4.22%
15 yr refi3.38%3.24%
View rates in your area
Find personalized rates:
Rate data provided
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.