India, June 9 -- Many parents save money in a 529 plan because it offers tax benefits for education expenses. The money in a 529 plan grows tax-free, and withdrawals can also be tax-free if used for approved education costs. However, many families find that their 529 savings do not cover the full cost of college because tuition, housing, and other expenses have increased over time.

An underfunded 529 plan is not a failure because it can still help reduce a large part of college costs, as per the report by Kiplinger. The main benefit of a 529 plan is that withdrawals are tax-free when used for qualified education expenses.

Qualified expenses generally include tuition, mandatory fees, books, required supplies, computers, internet access, ...