NEW YORK (CNN/Money) -
Your eldest is waiting on acceptance letters due this spring; your second child just entered high school. Meanwhile, your No. 1 ulcer -- your college savings accounts -- is making you groan from nearly three years (and counting) of stock-market pain.
Okay, two suggestions: First, take a deep breath. (Admit it, never a bad idea.) Then realize while you can't change the past, there are some things you can do to improve your education-financing picture -- and your mood -- going forward.
Check the time. You may think you have to have all your ducks in a row come your child's freshman year in college. You don't. As far as your college savings are concerned, your time horizon extends at least to the end of senior year in college, said certified financial planner Doug Flynn of Flynn Zito Capital Management in Garden City, N.Y.
Take a glass-half-full approach. So you're distressed you can't do what you planned -- provide Jr. with a free ride for four years. But maybe you can plan to do the next best thing, which is have some savings available to help him repay his loans when he graduates, said certified financial planner Judy Miller of College Solutions in Alameda, Calif. Again, that gives you at least another four years to nurture your college savings accounts.
Keep on keepin' on. Staving off the tuition gremlin is an ongoing process, made easiest when you break it down into manageable pieces. Saving just $350 a month for a year in an interest-bearing account, for example, can pay for much of the tuition and fees for one year at a public institution, which this year costs on average $4,081, according to the College Board.
Prioritize your fears. The one good thing about monstrous bear markets is you get to know your real appetite for risk almost better than you know your spouse. If you really can't stand to lose another cent or hear about one more doozy of a day for the Dow, Flynn suggests it may be time to get out of stocks altogether. Ideally, you should have been moving a portion of your college savings out of equities every year since your child turned 14. (For a look at how much per year, click here.)
But if your top fear is missing out on the next sustained upswing in stocks, then you might just move a portion of your money out of stocks to lock in that part of your savings -- say, what you anticipate needing in the first year or two of college.
Where you park the money is your next concern. Money markets are one of your safest bets but also among the lowest yielding. Flynn suggests opting instead for a short-term bond fund. He notes that bond-savvy money managers expect short-term, high-quality corporates will provide bigger gains than government bonds over the next 12 months.
If you have money in a 529 savings plan and can't stomach any stock-market volatility, see if you can switch the money to a guaranteed investment contract (GIC) in the plan, Miller suggested. A GIC will pay a specified rate of interest for a defined period.
Curl up with a good glass of wine and a financial aid handbook. Folks who get the most aid are those who know how the system works, experts say. There's plenty of free information at CNN/Money.com -- see, for example, "Beating the Financial Aid Trap" or Money 101. And there are other free online resources, such as FinAid.org, that can clear up some of the mystery. Then there are helpful guides, such as Kalman Chaney's "Paying for College Without Going Broke," published by Princeton Review, and "Get a Jump! The Financial Aid Answer Book," published by Peterson's with contributions from the editors of this Web site.
While college costs have been rising at a breathtakingly robust rate, the good news is colleges and universities are offering record amounts of grant aid. That's money students will never have to pay back.
So don't be deceived by sticker prices. The price tags on private colleges may be higher than those on public universities, but private schools in many ways have more latitude and more resources when it comes to giving aid. That's why out-of-pocket costs to you and your child may be considerably less at a private institution. (For more on how the country's best and most expensive schools are offering substantial discounts to students demonstrating financial need, click here.)
Remember, "loan" isn't a four-letter word. If your chances of getting financial aid are slim because your family's income is high -- typically $150,000 or more -- you needn't despair. With interest rates at historic lows, this is one of the least expensive times to borrow money. Some of the most widely used options include: PLUS loans for parents, and Stafford and Perkins loans for your kids. (For more on these, click here.)
Manage expectations. This is the strategy you might use with your 9th grader. The biggest financial decision you make is where your child applies to college, said certified financial planner Judy Miller of College Solutions in Alameda, Calif. Look for schools most likely to provide not only a good education, she said, but merit aid that rewards the kinds of activities your child excels at.
Open a Roth IRA in your child's name. Your 9th grader might just turn those after-school or summer earnings into a nifty nest egg. What both Miller and Flynn like about the Roth IRA are its many tax and aid advantages. For example, the money will not be treated as an available asset under financial aid formulas, which exclude retirement assets. The earnings on your child's contributions grow tax-free. And if your child doesn't use the money for college, he or she can tap it tax-free well before retirement age under certain circumstances (e.g., a down payment for a home). (For more on Roth IRAs for teens, click here.)