Paying for the Old College Try Advice for small-business owners on how to finance your kids' college educations

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As the parent of one daughter who's a junior in college and another who will be a freshman in September, I know the cost of SAT review classes, private tutors and prep school tuition all too well. But, when it comes to college, many of us assume our kids will get grants, scholarships or low-interest student loans.

The reality can be very different. At a time when the recession is pushing down the prices of almost everything (including our businesses' products and services), the cost of college tuition is still rising. According to the College Board, the not-for-profit organization that administers the SAT and Advance Placement exams, the average cost of a four-year private college will be $26,273 this year, up 4.4 percent from the previous year, while a four-year education at a state school will rise 6.5 percent, to $7,020 a year.

The good news: There are hundreds of good colleges that charge affordable prices. Roughly 19 percent of students in private four-year colleges attend institutions that cost less than $18,000 a year, the College Board reports, and 32 percent of full-time students enrolled in public four-year colleges and universities pay less than $6,000 a year.

"Most families play the admissions game, which is, 'How do we get into the best school possible, and how do we afford to go?'" says Tim Higgins, a Marlborough, Mass., financial planner and author of Pay for College Without Sacrificing Your Retirement: A Guide to Your Financial Future.

Because BIZ Experiencess often see their incomes vary from year to year, it can be tough to plan for and afford college tuition. Here are Higgins' five tips for paying for college without breaking the bank:

1. Formulate a plan.
   You need to act as the CFO of your household finances when it comes to paying for college. College is too big of an investment to simply wing it and hope that grants and scholarships float your child's way. Put a plan in place that includes savings and investments, and start as soon as you can.
2. Shop for bargains, not labels.
   An Ivy League degree may land your son or daughter a better-paying job after graduation, but statistics show that the pay gap narrows after a few years in the work force. Consider that only 10 percent of Fortune 500 CEOs graduated from the Ivies.
3. Don't count out financial aid.
   Even if your family's adjusted gross income (AGI) is more than $100,000 a year, your son or daughter may still qualify for aid--especially if you have several kids in college at the same time. Go to this page and use the Expected Family Contribution (EFC) calculator to figure how much aid may be available to bridge the gap. Also check the database of 1.3 million scholarships valued at more than $3 billion at fastweb.com.
4. Tap low-cost government loans.
   Fill out the Free Application for Federal Student Aid (FAFSA) form, the CSS/Financial Aid Profile and, in many cases, the college's own financial aid forms. Higgins says two of the best student loan programs are the federally subsidized Perkins Loan, which charges no interest until graduation and then 5 percent thereafter, and the unsubsidized version of the Stafford Loan, which is available to all students who qualify for financial aid no matter how much their parents make.
5. Start saving.
   Even if you can sock away only $500 per month, that $6,000 a year (plus interest and/or appreciation) can make a big difference.

Economizing along with your kids also helps make college more affordable. Living at home costs less than a year in the freshman dorm, and earning an associate's degree at a community college before transferring to a four-year college can be a money-saver. "High school students don't understand finance," Higgins says. "But they do understand that they don't want to bankrupt their parents."