Even though my children have completed college, when this time of year rolls around the subject of paying for college still comes to mind. One popular college savings option is the use of a "Section 529" savings plan. The name comes from Section 529 of the Internal Revenue Service Code where the plans are defined. Essentially, it provides a method whereby you don't have to pay federal income taxes on earnings accumulated within a 529 plan. Later, the money you saved, along with earnings, is used to pay college expenses for your children. Most states also offer tax incentives.
Generally, in order to receive the state tax benefits, one has to save through the 529 plan provided under the auspices of their home state. For example, I live in Georgia and in order to save on Georgia income taxes, I would have to invest through Georgia's Path2College 529 Plan. However, there is no requirement that forces me to use Georgia's plan. For example, if I thought it suited my needs better, I might invest in Utah's plan, Utah Educational Savings Plan. By the way, Utah's plan is highly rated.
The point is that the plans offered through the states are not uniform. Rules and investment options vary widely. So, the wise parent or grandparent thinking about saving through a 529 plan would investigate many plans before selecting one. Of course, there may be a price to pay by going out of state. In my case, if I used Utah's plan, I could not save any Georgia income taxes. In my personal case, that's not a problem. Because of Georgia's liberal exclusion of retirement income from taxation, I pay little or no Georgia income tax anyway.
So, consider your personal financial and tax situation when choosing the right plan for you. Here are a couple of sites that provide great details: