(ARA) - Do you dream of the day when little Sally and Jimmy forsake their love of Barney purple for the school colors of a good college or university, but dread the looming cost?

College tuition can send a chill down any parent's back. Although the ideal is to start investing early on -- which can mean the difference between a school a child wants versus a less desired one where the price is right -- many parents become overwhelmed with investing and never start at all.

"Life's ups and downs sometime get in the way of parents' perfectly good intentions to save money for their children's education. Although it's wise to start early, I'm here to remind parents that it's never too late, either," says Randy Schuldt, vice president of IHateFinancialPlanning.com, a new site for the more than 75 percent of Americans who hate financial planning.

Before your child's number two pencil hits the college exams, financial professionals at IHateFinancialPlanning.com have come up with some ways to help parents overcome the frustrations and fears of financing a college education. Even if you never had the opportunity to attend college, there are more financial options available than ever before to bring a college degree within reach.

The Three S's: Start Saving Soon

So money wasn't set aside for junior's education the moment he arrived? That's okay. But if junior is growing a goatee and yearning to move out, it will be more difficult to amass enough cash to pull it off in time. Parents finding themselves in the latter situation are not alone.

"In my 15-plus years of experience in financial aid, I'm also finding that not many people plan and save money for a college education. A lot of variables affect why this is the case, but I think some people are more into securing material things now rather than saving for the future," says Marilynn Singleton, a financial aid manager at Arizona State University's graduate college.

If the child is under 10, there is some time to accumulate significant funds. Consider investments that have the potential to grow in value, like common stock or stock mutual funds. Financial professionals at IHateFinancialPlanning.com suggest parents to look for mutual funds that primarily buy shares in companies that are poised to expand and grow in the future.

If the child is between 10-14, there is less time and opportunity for investments to grow. At this point, consider a balanced investment portfolio consisting of growth stocks or stock mutual funds, plus limited maturity bonds or bond mutual funds, which provide income. Typically, longer-term bonds provide higher interest rates. A bond mutual fund invests in corporate, municipal or federal government bonds.

And if the child is over 14, one doesn't have to pray for the lottery to pull through. Consider investments such as income-oriented mutual funds, limited maturity bonds and bond mutual funds, which are timed to mature when tuition is due.

"Although the goal is to start early, just beginning is the hardest part," says Michael Behar, president of Behar and Associates, a finance and estate-planning agency based in Toledo, Oh. "Even if your child is already in college, you can start saving money to help defray costs accumulated later on."

A part-time job doesn't hurt either. Let's say Sally gets a part-time job delivering pizzas for $100 a week. If she saves half of her check for college starting at age 16, she would have $5,200 by her 18th birthdayand that doesn't include the minor interest accrued. It may not sound like much, but that would pay for quite a few textbooks.

Look into Loans

In addition to savings and investments, parents also should examine financial aid available through the child's college of choice. According to Twin Cities-based St. Thomas University's Office of Financial Aid, there are generally two types of financial assistance available: self-help aid, such as loans and student employment; and scholarships, gift assistance and grants that don't have to be repaid.

The main key to loans is to apply early and for as many as possible. Even if parents and students don't think they'll qualify, think again: many funding sources aren't available until an applicant has been rejected for federal aid. Keep in mind that many student loans such as the Federal Perkins, Stafford Loans and state-regulated loans have low interest rates. In some cases, student loan interest is considered tax deductible.

One loan to avoid, however, is the home equity loan. Nowadays, it's nearly impossible not to turn on the tube without some sports star talking up the benefits of such a loan. Although a home's value is not included in the calculations for federal financial aid and interest on home equity loans is often tax deductible, it doesn't compare to sound long-term investing and savings. Besides, a home equity loan can seriously botch up retirement plans.

"How does making second mortgage payments in your twilight years sound?" asks Behar, rhetorically. "The main thing is to shop around and find the student loans with the lowest interest rates and the best value."

And don't overlook work-study programs and tuition reimbursement plans available to college students through part-time jobs.

"Parents sometimes fear that grades will slip or that children will miss out if they allow them to work," says Behar. "But a summer job is a great way to teach responsibility. If parents start teaching their children financial responsibility early on, it teaches them to become independent. And that's one of the greatest lessons learned during college years."

Scholarships: They're Out There

Don't assume Sally's slugging skills will land her a full scholarship to a Division I university's athletic program. But don't discount them, either. The same goes for grades. Scholarships and grants are a lot like loans: Apply for as many as possible regardless of grade point averages or athletic abilities.

Although it may seem scholarships are a limited commodity, Behar advises parents that scholarships can be found simply by looking at a mirror.

"What is your heritage or your faith? What company do you work for? Do you belong to any community organizations? By answering these questions, you may find scholarships," says Behar. "I think the Internet is also a wonderful way to uncover all kinds of scholarships."

Many civic and service organizations, such as a local Lion's Club or American Legion, provide scholarships. So do many companies, from small employers to large international corporations like Volvo and General Mills. By taking some time, scholarships can be extracted from a variety of sources. The St. Thomas University Office of Financial Aid also recommends these sources: primary schools (some private and public schools award scholarships to graduates), music programs, intended major or course of study programs, home town government and social organizations, and parents' alumni associations. Check with the school's financial aid office to determine whether such sources are available.

High school students may find a variety of scholarship opportunities at their high school's guidance office. But Singleton advises parents and students to shy away from scholarship search firms, especially those who ask for more than $50 for their services.

"Although some search firms are very legitimate, new ones pop up overnight, making it difficult to determine which ones are legitimate. If students have the time, I advise them to forgo the firms and to search for scholarships themselves," says Singleton.

One well-known scholarship that fits into the self-help aid category is the ROTC Scholarship, available to students who enlist into one of these military branches: Air Force, Navy/Marine Corps, and Army/National Guard. Monetary amounts are based on the level of education received. For more information, contact a local recruiting office.

Compare Colleges

Students and parents should also ask themselves whether the quality of the education meets the intended outcome.

"In other words, don't have your kids-or you-end up owing $100,000 in loans for a degree in floral arranging," says Behar.

And if junior's heart is set on earning a degree from a private, and often more expensive institution, there can be some creative ways to save money.

"Another strategy is to leverage limited funds for college is to attend a community or junior college for the first two years to complete basic requirements," says Singleton. "These schools are usually significantly cheaper to attend and, in most cases, the credits can be transferred to a four-year institution of the student's choice."

Refer to a student manual or guidance counselor to determine transfer rules and regulations. Some schools even offer scholarships specifically geared toward transfer students.

Cut Costs

Keep in mind that paying for college doesn't stop until all loans are paid. That means some luxuries may need to be sacrificed in order to pay for a college education. Bear in mind, however, this is a short-term solution for a long-term benefit: college grads today make between $250,000 and $500,000 more over their working years than non-graduates, according to "The 7 Secrets of Financial Success" (by Jack Root and Doug Mortensen, 1996, p.196).

College students can save money in a variety of ways, from staying at home the first two years to not bringing a vehicle to college. (Many campuses prohibit first-year students from bringing a car on campus, other schools charge heavy parking feesnot to mention the cost to maintain a vehicle). Other cost-saving measures include participating in a cafeteria plan rather than eating out, limiting or eliminating credit card use, and sticking to a monthly budget.

"You can save a bundle of money by challenging certain assumptions about college and finding more frugal alternatives," says Behar.

Students should also keep in mind the extra costs accrued when attending a school out of state.

"Although an out-of-state school may offer some attractive scholarships, there are some extra costs that won't be covered. Flying home for Christmas and long-distance phone calls all have to be figured into the equation," says Singleton.

And sound budgeting should continue after the student graduates.

"Hold off on the new car or the nicer apartment. The key to adulthood is to become financially independent," advises Behar.

For more helpful tips on preparing financially for a college education, visit the IHateFinancialPlanning.com Web site or visit a college financial aid office or Web site, such as www.stthomas.edu or www.asu.edu.

More Ways to Pay For College

(ARA) - Here are some additional ideas on paying for a college education:

Government Series EE savings bonds. They're considered safe, and interest is tax-free for low and middle income families if bonds are held in a parent's name and they are used to pay tuition during the tax year of redemption. More good news: The tax on the interest doesn't have to be paid until the bonds are cashed.

Zero coupon bonds. Like savings bonds, these bonds are issued at a discount from the face value and pay the specific face value amount at a maturity date you select. Caution: The amount of discount from the face value may be included in income.

UGMAs and UTMAs. Which stand for: The Uniform Gifts to Minors Act and the Uniform Transfers to Minors Account, which let parents transfer small to medium-sized investments to minor children for tax advantages.

Grandpa and Grandma. This may get students over the college financing hump: Tuition payments made to the school are not subject to a federal gift tax. Just make sure they make the check payable directly to the school.

Hope and Lifetime Learning Credits. Federal tax credits are available to either a parent or a child who pays out of pocket for qualified tuition expenses. The Hope Scholarship Credit provides up to $1,500 per year for each student enrolled at least part-time during the first two years of post-secondary education. The Lifetime Learning Credit allows only $1,000 per family.

Student loan interest deductions. Parents may be able to deduct student loan interest for loans incurred on behalf of their dependents for qualified education expenses. See your accountant for details.

Education IRAs. Non-deductible contributions up to $500 a year without penalty to an Education IRA are allowed for children up to age 18. The money grows tax deferred and withdrawals for up to the child's amount of qualified education expenses for that tax year aren't subject to federal taxes. Parents must withdraw the money before the beneficiary turns 30.

State programs. State government programs vary from state to state. Several states, including Minnesota and North Carolina, now offer state savings/matching programs. Check with your state government for details.