Get smart about college spending

Tapping your home equity to pay for your kids' education is a reasonable move only if you've exhausted all other possibilities. Here's what you should consider long before you contemplate borrowing against your home:

Make sure your kids max out on student aid

Please don't feel guilty about this. They need to take on some of the cost themselves. Besides, repayment terms for students are better than what parents can get. If your child chooses a profession with a low salary, the Income-Based Repayment plan scheduled to take effect in mid-2009 ensures that your child's monthly student loan payment will not exceed 15 percent of his or her disposable income, and any outstanding balance after 25 years will be forgiven.

Shop for scholarships

Don't just take the word of your guidance counselor or college consultant - put your own elbow grease into looking for every possible bit of aid. Check out www.fastweb.com for a free database of scholarships.

Consider a less expensive route

By doing your homework, you can find plenty of public universities -- as well as special programs within a school -- that deliver a terrific education at a much lower cost than many private institutions. A solid public school education that doesn't leave you or your children owing six figures may be what's best for you and your family.

Start a 529 savings plan

There's no income limit on who can make use of these savings vehicles for college. Interest on invested money is tax deferred, and withdrawals used to pay for college costs are tax-free. Parents who are on track with their retirement plans and would like to build a college fund for a young child can learn more about 529s at www.savingforcollege. com.