College-Savings Program Flawed at the Core

Kevin Carey, policy director of Education Sector, an education policy think tank, has been a vociferous critic of 529 plans, blaming their meltdown on the fact that "public officials told [parents] to risk their children's educational future in a casino run by idiots and thieves."

"When this whole 529 thing took off, we imported a lot of the logic and rhetoric around retirement savings into saving for college as if they were more or less the same thing," he says. "But there are some very obvious differences between the two."

As Carey sees it, parents have been coerced into jumping on the 529 bandwagon.

"You are in the hospital having a baby and they are handing you 529 pamphlets," he says. "People are told that this is the right thing to do by your child."

Carey blames a lack of foresight on the part of elected officials. They need to do more, he says, to rein in public college tuition increases, pressure private colleges and increase need-based financial aid.

"They need to do something because people are rightfully very anxious about the fact that college keeps getting more and more expensive," he says. "Then just say not to worry about it because we have this great college savings plan -- which works OK, until the market crashes. The problem is that nobody knows when the market is going to crash again but we do know it is going to crash again sometime."

-- Reported by Joe Mont in Boston.

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