There are lots of benefits to using 529s to save for future college costs. They are funded with aftertax dollars, which then grow tax-free. Withdrawals for qualified education expenses are also tax-free. On top of that, some states offer tax deductions or credits for contributions.
Because of these money-saving tax benefits, 529s are becoming increasingly popular: According to data from the College Savings Plan Network, U.S. families had invested $319.1 billion in 529 accounts as of year-end 2017, a 16% increase over 2016 levels.