If I were to send a child to college starting today, there's a very good chance that 120k would NOT cover 100% of the costs. 30k per year, all in, is light at MANY places. College costs are escalating at what, 7+% now? That is why I'm not too worried about overfunding with this initial amount. Actually would not be surprised if I need to top it up later. All it takes is one disaster year, early in the program, to make catching up take a LONG time (nasdaq late 90's anyone?). That same scary math applies to people who retire with enough to "make it all the way" assuming a straight line world. Monte Carlo simulation is often enlightening there.
As far as student aid...it'll never happen for me. Scholarship would mean I can get $$$ back w/out the 10% penalty. I'd pay taxes on the gains vs scholarship $$$, but can distribute that to my child and pay that at her rate.
I guess we have a fundamental disagreement anon. I just think the tax free (true, they might not go to college) aspect is just too good to pass up. And are tax rates going to stay the same, up or down?...I think up is a very safe bet, for me at least. If something better comes along in 15yrs, I'd have enjoyed "tax free" compounding for 15yrs, unlikely a bad thing. Wait and I have a much smaller amount then. I believe 529 money is also out of my estate for estate tax purposes?
I understand your point though...it is true, overfunding would be irksome, no doubt. I just think underfunding would be moreso.
If I overfund, I think golf lessons qualify?...or I'll take up something else at the local college. Or the grand kids are set.
itstoomuch, FYI I'm originally from Salem