Coghan feels the tilt to conservative options is a natural reaction to the financial and economic crisis and that investors will eventually be more receptive to equities.

"I think they are concentrated on paying the bills and their own retirement," he says of investors. "The third priority might be saving for college. Probably, most financial advisors would say that's the order in which you should consider things."

Others express a similar sentiment, saying much of the pullback on college savings is simply due to people placing a higher priority on repairing their retirement funds.

"You can always get a loan for someone going to college, but you can't get a loan for retirement," notes John McAvoy of Waterstone Retirement Services in Canton, Mass.

While market conditions are certainly a key factor in how consumers approach 529 funds, the performance of supposedly conservative age-based options have shown the product's vulnerability, say advisors.

In its annual ratings of 529 plans, Morningstar put the failure of age-based plans at the core of the product's problems in 2008. The poor performance was partly due to the fact that many age-based plans held the Oppenheimer Core Bond Fund as the fixed-income component of their portfolios. The fund lost 35% in 2008 with its exposure to mortgage-backed securities.

Morningstar also came down hard on 529 plans that left investors too exposed to equities at the point the funds were needed to pay for college. For example, New Jersey's direct-sold 529 plan has one age-based option that can have as much as 35% invested in equities for beneficiaries already enrolled in college.

"The critical lesson for investors is to pay particular attention to the latter stages of a plan's age-based option, and be sure you are comfortable with the risk your plan is taking," Morningstar says in its rating report.

Jerry Verseput, president of Veripax Financial Management LLC in El Dorado Hills, Calif., notes that the mix of stocks and bonds can be significantly different depending on who manages the plan.

Because of the element of risk inherent with 529 plans, he advises clients to depend on 529 plans for only 50% to 70% of the total they will need for college expenses.