For Hunter, having a small amount taken out of her paycheck each month seemed like a better option than having her grandchildren face interest rates and student debts that can often take years to pay off.

"If they can have this little bonus in advance it will make a big difference and motivate them to apply for Ivy League colleges or something bigger and better," she said. "Knowing they have this in their pocket will empower them."

Commissioner of Higher Education Rich Kendell said the savings plan is even more critical for students now as tuition rates continue to increase each year. Although the Utah System of Higher Education has asked for more money for need-based loans for students, Kendell said the office is working to encourage parents and grandparents to save for the future.

College grants and federal loans may be the best option for some students, but Kendell said a savings account means interest-free money that can be used for tuition, books, housing and even computer equipment required for class.

"They're in a better position than taking out a loan because it's your money," he said. "We're trying to encourage everybody to get into the savings mode. I think there's so much more dependence on education these days. It's very difficult to be competitive in our world without some post-secondary education."

The popularity of the Utah plan has grown recently, West added, as families have become more aware of the tax deduction benefits, as well as Utah's low fees and no minimum requirements. The plan also allows money to be transferred to other relatives if the student in the original account gets a scholarship or decides not to go to college.

In addition, the account owner and the beneficiary do not have to live in Utah. The money can also be applied to college expenses at any university with federal aid programs, not just Utah schools.

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E-mail: estewart@desnews.com