Because I'm a nerdy kind of person and just love doing spreadsheets etc I worked out a spreadsheet to compare investments under the 2 systems - here are the results based on investing $50/month for 20 years at 5% - you would have approx an extra $7,500 to pay for your child's education - with no restrictions on use etc. I live in Florida and we have Florida Bright Future scholarships which pay full tuition and fees - but if you started out putting your money in one of the education IRA's and your child got the scholarship you would have to pay taxes on the whole thing because you can only use them for tuition and fees and that is being paid for. So much less complex to save your own money the way you CHOOSE to. Here's a copy of the spreadsheet:

Does this site deactivate you after a certain amount of time? I click on reply and formulate an answer and then preview it but if it has taken me a while to write the reply it seems as though the post doesn't go through. It looks like it went through but instead of my name it has anonymous for the name and it is is never posted.

Response to person who wrote Achilles Heel - I posted this as a response but it didn't show up so here goes again.

Your comment that giving a prebate and determining a household would be so difficult shows me that you don't understand what the prebate is nor the current complexity of the income tax system.