They are state-sponsored investment programs designed to specifically help people save for college. Each state chooses an investment company to manage their plan, so you get the benefit of no-hassle investment.

What's even better for prospective college students is that the money you put in and the money earned qualifies for tax advantages, which helps to stretch your dollars even further.

You can contribute to a state's 529 plan no matter what state you live in. Some plans offer preferential state tax treatment. And most 529 plans allow students to use their funds to attend any accredited college in the U.S.

Age-based: When college is years away, your money is invested aggressively, giving it the chance to grow quickly. As the child gets closer to college age, your investments automatically become more conservative, which helps protect the money already earned.

Fixed: The investments are kept at the same level of risk throughout the life of the plan.

They're flexible. The money in a 529 can be used for qualified expenses at just about any accredited college, university, or technical school in the U.S. And some of the 529 plans let students pay the cheaper "in-state resident" tuition rates, no matter what state they're from. One more benefit is that the 529 plan can be transferred if necessary, to certain family members of the beneficiary without penalty. So if one child doesn't use up all the money, you can still help your other children or even use it for your own education.

They're easy. You can use systematic deposits to add money to the 529 plan, or have money deducted from your paychecks. Anyone can contribute to the 529 plan, and deposits can be as little as $15.

They make good money sense. You won't pay federal income tax on the money that the investment earns. And most important, as the donor on the account, you retain control of the 529 plan even after the child turns 18. (So no matter how badly they want to use the money on a motorcycle or a road trip, you can make sure it gets used to fund their education.)

• Parents who want to help their kids go to college without racking up a lot of debt
• Grandparents who'd like to invest gifts of money on behalf of their grandkids
• People looking to invest for their own further education
• People who like tax advantages

The availability of the tax or other benefits mentioned above may be conditioned on meeting certain requirements.

Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans carefully before investing. More information about 529 plans is available in the issuer's official statement, which should be read carefully before investing.

See the list of schools that accept 529 plans