Solving the 529 puzzle. Money.

Those 529 college-savings plans are coming soon to a brokerage near you. And that's not good news. Created several years ago, the state-sponsored plans allow parents, grandparents, and others, starting with as little as $25, to set up accounts whose earnings stay free of federal taxes as long as the funds pay for educational expenses. All 50 states have established 529s.

When the plans were started, states made them simple and affordable. Generally, the financial services companies hired to manage the plans, such as Fidelity, TL4A-CREF, and T. Rowe Price, offered no-load, age-based asset-allocation mutual funds that were heavy on stocks for young children and weighted toward more conservative bond and money-market funds for kids approaching college.

Setting up a plan was easy. You got an application and sent in a check or signed up for automatic payroll deductions. If you invested in your own state's plan, contributions were sometimes deductible from state taxes, and earnings and distributions were likewise often state-tax free.

When Wall Street got a whiff of all the money pouring into 529s--about $35 billion by mid-2003--it had to get a piece of the action. So now big banks and brokerage houses are competing to manage the funds and sell the plans. Their pitch: They will offer more investment choices, and with their broker networks, they'll be able to reach more parents and convince them to put aside money for college.

What they are really adding, however, are unnecessarily complicated mutual-fund options; higher minimum initial investments, which will make the plans more difficult for parents to start; and, need we mention, commissions and other fees that financial institutions will be happy to pocket.

Take the case of New York state, which said it would replace its old TIAA-CREF plan with one that according to an insider, resembles Nevada's more complex ...