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Jrubinstein makes a good point about the state tax deduction. It's definitely worth considering in my state of Virginia, as well as in most state 529 plans. In most cases, the tax deduction more than offsets any management fees incurred.

A more general point: many people seem to feel strongly about the issue of control. It's foolish philosophy not to turn your money over to someone else, right? I generally agree. But, for example, in my case I'm managing about 80% of my portfolio myself, and after twenty years of investing I can say it still involves a lot of work and worry. I like doing it, but it is time-consuming. And I don't mind it at all that some of my retirement money is managed by TIAA-CREF and by some good mutual funds that may or may not beat the market every year.

So I don't mind turning over some of my money to a state 529 plan run by TIAA-CREF or by Alliance Capital or by Vanguard. (John Bogle's Vanguard index fund has been justifiably praised by many Motley Fool writers and posters, and fortunately is well represented in a number of 529 plans).

I think for many people it makes sense to have a blend. I currently have a custodial plan for my seven-year-old son. The value has grown to a decent size, and now I think I will supplement it with a 529 plan. I'm reading Joseph Hurley's excellent book on the subject, "The Best Way to Save for College," and will soon make my decision. There are certainly pros and cons to custodial plans and to 529 plans, and to other choices such as pulling savings out of Roth accounts. But depending on your situation, a blend of choices makes a lot of sense.
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