Most parents should probably keep as little money as possible in their child's name, because the financial aid formulas assess as much as 35% of the students assets, compared with just 5.6% of the parent's assets when determining how much aid to give. If your son or daughter has a big college-saving account and you think it may cut your chances of getting aid, you can "spend down" the account on a car for college or any other item that the IRS considers of benefit to the child. But couples earning more than say, $200,000 are unlikely to receive need-based aid. So they should continue to keep this money in the child's name, because it will generally be taxed at a lower rate. Again, always consult with your financial advisor before making major financial decisions.

When families have exhausted all avenues to free money (including applying for scholarships through their employers and local groups), they can take out low-interest student loans such as the Federal Stafford Loan. Repayment begins 6 months after graduation. Parents can also tap into their home equity, or borrow against their whole-life insurance at a net cost of only 1% or 2%. 

Whenever possible and most colleges offer them, families should use tuition installment payment plans that allow parents to spread out payments into monthly payments ranging from 3 to 12 months. These are generally interest free and should be used even if one has the cash to pay the college bill. Tuition installment plans in combination with the Federal Parents Loan for Undergraduate Students (PLUS) are a great way to leverage, personalize and expand education purchasing power. By paying over time, maximizing payment from current income and using the PLUS loan to provide more dollars for education, families can more effectively manage tuition costs and keep retirement considerations as well as other family goals in balance.

Federal Stafford, PLUS and Private Alternative Loans can be accessed via the Paying for College Education Resource Center. Just click on the loan you are interested in under the Products heading on the home page.

When students borrow for college or graduate school, they need to always keep borrowing at a minimum. It's just good, practical financial sense.

College work-study is an excellent way to keep borrowing at a minimum, but students must remember that in order to get the amount of financial aid awarded as work-study, they have to work the hours.

Parents should keep in mind that college expenses begin well before matriculation. It's a good idea for families to budget/save for these expenses that can add $2,000 to $7,000 to the college experience. For example: Travel to tour campuses, applications, testing, test preparation classes and automobiles for commuting students. Additionally, the cost of traveling back and forth from college, long-distance telephone calls, clothing, computers, semesters abroad, apartments when they move out of the dorm and the "I ran out of money!" calls add up to more than is listed in the college catalog.