In the states that allow a state tax deduction for a contribution to a Qualified Tuition Plan, you that does not have sufficient funds to contribute to a Qualified Tuition Plan, but would like to take advantage of the state tax deduction, could borrow funds to put into a Qualified Tuition Plan in order to get the state tax deduction. You could then immediately withdraw the funds and pay for current college costs. Some states have early withdrawal penalties for not keeping the funds in the plan for a minimum amount of time. Usually the penalty is only on the earnings, and therefore, the penalty is insignificant.