Major concerns include poor disclosure, overly aggressive sales pitches and fees both high and hidden. Investments are equally split between low-cost investment houses such as TIAA-CREF and Vanguard and broker houses with higher fees such as Edward Jones and Charles Schwab. Analysts complain that it is virtually impossible to compare college savings plans. The Municipal Securities Rulemaking Board (MSRB), associated with the SEC, has proposed rules requiring more disclosure of alternatives, but trade organizations such as the Securities Industry Association, consider the MSRB proposals unworkable. At present, since the securities are considered to be governmental rather than private, the SEC can only go after fraudulent sales pitches, not those that are merely misleading or overly zealous.
Certainly it is understandable that parents would want to be able to finance at least part of their child[ren]'s education; likewise it is prudent to plan ahead and to take advantage of legitimate tax breaks. Given the "wild West" nature of these savings plans, however, I recommend either using an alternative (usually taxable) vehicle or using a low-cost investment organization that one presently deals with and trusts.