529 college savings plans have been increasing in popularity over the past few years.
There is one 529 college savings plan sponsored by each state. Each state's 529 plan operates basically the same. You can live in one state, use another state’s 529 plan, and your children and grandchildren can go to school across the country. There's no restriction or limitation to it. However, if you are lucky enough to live in a state that has some state income tax deductions for using your own state’s 529 plan, that could be a great option for you.
The main benefit of using a 529 plan is the tax-free growth when you use it for qualified education expenses. So think of any accredited institution - a college, a community college, in-state, out-of-state, overseas - as long as it’s accredited, it’s generally available for that tax-free treatment. Additionally, Federal legislation has included the use of 529s for trade schools and apprenticeships for tax-free treatment.
Other options for college savings include a uniform gift to minors or a uniform transfer to a minor's account. Now this is an irrevocable gift that you give to your children or grandchildren, and that money becomes theirs without question of their age of majority in your state, which could be 18 or 21. This can be a great way to help fund some education expenses, but it’s not strictly for education. It can also be used as a gift for a car, to start a business, or maybe just to get ahead in life, or purchase a home down the road, too.
You could also consider a taxable savings account in your own name or your spouse’s name, which allows you to retain those assets. You just “gift” that money to your children or grandchildren to help them pay tuition.