The role of the federal government in authorizing tuition savings plans and the relationship of these incentives to more traditional student aid programs are examined. Most of the recent proposals to provide incentives for families to save for their children's education would allow tax breaks. For example, the Reagan administration proposal would allow families to set aside $1,000 per year, per student for college costs. The money saved would be deducted from a family's taxable income. Benefits from these plans are intended for lower and middle-income families; under the Reagan administration plan only families with incomes under $60,000 would be eligible. The tax benefit, though, would be greater for families in higher tax brackets. The benefits derived from savings incentives are not distributed on the basis of need at the time of college attendance. The major focus of current programs is to provide assistance to the lowest-income students. It is concluded that there are two serious limitations on tuition savings plans: their impact cannot be felt for many years, and they do not provide significant benefits to lower-income students. Additionally, these programs are complex and require a working knowledge of federal tax laws for families to understand them. (SW)