Some states will give you a tax deduction for 529 contributions. This will allow some tax savings for money that spends a minimum amount of time in the account.
Yes you have missed the best benefit, the tax free growth, but there might be an opportunity for some growth. The child's expenses beyond tuition can be covered by 529 plan. It can even cover room and board if they are living in the dorms, off campus apartment, or even at home. Each University through their financial aid office will calculate the total cost of attendance for each student type.
Before doing this you need to look at several things:
- Does your state give a tax deduction for contributions to a 529? You need to invest in the correct plan to get this deduction.
- Is there a minimum amount of time the funds have to be in the plan?
- Is there a maximum amount of the tax deduction in one year?
- Understand that what qualifies for the Federal education tax credits and what can be used as a qualified Educational expense from a 529 are different lists, make sure you don't allocate money the wrong way and impact your ability to claim a benefit.
- Make sure that the plan has the investment option that meets your investment goals.