Planning for the High Costs of College

In 1998 the average annual cost for a four-year private college was just over $21,000. By 2008, the cost rose to over $34,000. The cost of a public college is less, but can still certainly run upwards of $12,000 annually.

First, it's important not to panic. The figures above do not take into consideration grants, scholarships, financial aid or other types of subsidies. These are all means of helping millions of students get through college, along with student loans and part-time jobs.

Below is an overview of the various ways you can approach paying for your children's college education:

Savings plans: The earlier you start, the more you can let your money grow. You can use a new state-sponsored 529 College Savings Plan for tax-free growth or simply start a college fund on your own. Either way, you need to be diligent and invest regularly. Start with more high-risk, high-reward investments, and once your child reaches high school, you should become more conservative in your investments.