529 plans should never be considered as automatic choices. First, many 529 plans carry hefty fees. Second, 529 plans really limit investment options.

Nevertheless, the WSJ article does give blessing to some 529 plans:

• Alaska T. Rowe Price College Savings Plan
• College Savings Plan of Nebraska
• Utah Educational Savings Plan

You might also want to read PFBlog's Saving for College series and discussion of 529 Savings Plan and 529 Prepaid Tuition Plan.

The 529 plan, once touted as a powerful tool to help families save for the crushing costs of college, is encountering some significant problems.

The flow of money into new and existing 529 savings plans fell to $13.69 billion last year from $13.72 billion in 2004, when the inflow surged 20%, according to Financial Research Corp. Last year's drop, the first on record, came even as the estimated number of 529 accounts grew by about two million to more than seven million, according to the Boston-based research firm.

The waning interest comes as the tax-favored savings plans have been tarnished by regulatory problems related to how 529s have sometimes been marketed in the past. Hoping to revive interest in the plans, sponsors of 529s, which are offered by each state, are trying to make them more attractive. Some states are cutting the administrative fees they charge. Other states are renegotiating management contracts, setting up a rivalry among investment firms to offer lower management fees and greater investment choices.

The recent slowdown in 529 plans' growth could reflect consumers' increasing difficulty in setting aside savings. But investment advisers note a shift in how clients view the plans. Joshua Schlinsky, a Fort Lauderdale, Fla., financial adviser, says the number of families investing in 529 plans in his area has dropped by about half in the past couple of years. "They were the hottest thing on the market five years ago," he says. But recent problems surrounding the plans have "greatly decreased the amount of people that have chosen" them.