A. Below are some common arguments against 529 and the counter-arguments.
1. Investment in 529 could loss money in the end.
Since 529 money is mostly invested in the stock markets, there is a chance it could loss money during the time it's invested. (True, but your investment could gain over time. In short, there is no guarantee.)
2. Money in 529 hurts financial aid chances
The more you save in 529, the less your financial aid chances. While other investments, such as Roth IRA, permanent insurance, etc. are excluded from the financial aid formula. (True, but the impact from 529 on financial aid is relatively small, only 5.64%)
3. The fees on 529 plans are outrageously high
The fees on most investment options under 529 plans are very high, and you are stuck with the limited choices. (True, you should shop around and find the best plan investment options, although if you buy from an out of state 529 plan, you will lose your own state's tax benefit, if there is any.)
4. If your child doesn't go to college or drop out, or you saved too much, you are out of luck.
In any of the circumstances, you will have to pay tax on all earnings (if there is any), plus 10% penalty. (If the child doesn't need the 529 money, you can transfer it to another child.)