Ike Brannon, writing for the Weekly Standard, argues no.
The record for such state-based [college] savings funds isn't particularly encouraging. The states, of course, administer their own college savings accounts, and to say that these are investor-friendly would be a stretch. Most states and the District of Columbia offer various funds in their college investment programs; the costs for those government-provided funds can be compared with the same funds offered on the private market. Take the S&P 500 Index Fund run by State Street Global Advisors: On the private market, the fund's management fee (known as the "expense ratio") is 0.157 percent. Over at the D.C. College Savings Plan, by contrast, the expense ratio is a hefty 0.46 percent—triple the cost of fees outside the college fund. The costs are higher in part because the District imposes a 0.15 percent fee for "expenses," a fee shared with the investment company managing the program (in the case of D.C., this is Calvert Investment Management).
I have some concerns of my own with state-run retirement plans, which I’ll outline in a forthcoming article in National Affairs. But for now, click here to read Ike Brannon’s whole article.