I'm speaking as an aunt, not a parent here, and I'd love your input.
At first, I thought of contributing to 529s for the nieces and nephews, but then I came up with what I think is a better idea.
In my town, you can get the first year at community college free. I think most of them will take that route. If they do, they're likely to transfer to a state college. They should get scholarships (I'm in education, so I'll be sending them essay contest information constantly), but they'll likely have more to pay, and it's unlikely their parents can foot most or all of the bill. So I was thinking... if I hear they're taking out loans, I could offer them a 0% loan from me instead using my fun investment account money (my little account that's doing pretty well right now but is fairly high risk; I keep it around since the bulk of my investing is boring). That's fun money I'm not including in my retirement plans anyway; if it disappears, we're good. If it does well, we get a nice vacation... or a niece/nephew gets a 0% loan. As far as payment schedules, I think it would be fair to have a "pay off X amount by the time your little sister/cousin needs a similar loan" type goal. I'm not planning to foot the entire bill for anyone, but a 0% loan of any amount could prove very useful.
Such a loan would also be a great opportunity for us to have a chat about finances, saving, investing, avoiding credit card debt, etc., which could hopefully help them make some decent financial choices early on.
What do you think?