Chart your course. Once you've estimated how much your child's college education will cost, decide how much you want to contribute and how much your child will be responsible for. For example, some parents commit to paying for tuition, fees, and room and board, giving the child the responsibility for the rest of the tab. Once you've made that decision, figure out how much both you and your child will need to save.

If you haven't already, now's also the time to evaluate your safety net. So review your disability and life insurance coverage to ensure you'll be able to adequately provide for your child's college education should you or your spouse become ill or die prematurely.

Don't neglect your retirement savings. If money's tight, you might be tempted to abandon saving for retirement in favor of building your child's college fund. However, though it may seem selfish, there are good reasons not to.

For starters, retirement accounts offer tax advantages that lower your current tax bill, as well as allow your money to grow more quickly than other accounts. Plus, if your employer kicks in money in matching contributions, these deals are too good to pass up. Second, some retirement accounts aren't counted among your assets under the current formula that determines your eligibility for needs-based federal financial aid. (Though some colleges do take retirement assets into account when doling out their own aid.) Besides, you or your child can take out loans for college if necessary, but you can't borrow to fund your retirement.

Invest regularly and wisely. If you can't save as much as you need to, save as much as you can since even small amounts add up over time. The best way to do this: Sign up for credit union direct deposit and payroll deduction services, and automatic mutual fund investment and reinvestment plans.

Equally important: Brush up on investment basics and school yourself in all the college funding options. For example, get all the facts before you invest in an education IRA or state-sponsored college savings plan, or before you put any money in your child's name in a custodial account.

Get the facts on financial aid. According to the College Board, about half of all college students receive some type of financial aid. In addition, even students who receive no apparent financial aid benefit from the gifts, endowment income, and state and federal subsidies that colleges receive.

Some aid is based on financial need, while some is available to all families who meet the general eligibility requirements. The federal government is the largest single source of aid, providing about 75% of all aid dollars.

Last year, students received more than $64 billion in total financial aid from federal, state, and institutional sources -- a record amount that's 85% higher than a decade ago, after adjusting for inflation. The vast majority of this growth however, was in the form of loans. In fact, loans now represent about 58% of all aid, compared to just over 40% twenty years ago.

While it's true that the more assets you have, the less needs-based federal financial aid you'll qualify for, the current aid formula bases a family's eligibility mostly on income -- a much smaller weight is given to assets. Therefore, contrary to what many believe, building a college fund won't necessarily hurt your chances of qualifying for needs-based aid. What's more, even if you calculate that your family would be eligible for aid today, the rules, as well as your personal financial situation, may change yearly. Plus, whatever needs-based aid you'll qualify for will likely be in the form of loans. So the more you save, the less likely you and your child will have to borrow later.

Teach your child about money. Before you send your child off to college, help him or her become a regular saver, responsible borrower, and wise consumer. Start building these skills at a young age by giving weekly allowances, helping open a savings account, and providing opportunities to earn extra money by doing household chores beyond regular responsibilities. When your child reaches the teen years, consider a share draft/checking account, debit card, and perhaps a low-limit credit card. High school is also the time to begin discussing college plans. Specifically, talk about what costs will be the child's responsibility, and the options for coming up with this money.

Borrow wisely. U.S. Census Bureau data shows that college grads earn 75% more on average than high school graduates. And over a lifetime, the gap in earnings potential between a high school diploma and a BA or higher exceeds $1 million.

So a college degree is generally worth the expense. Nonetheless, since the federal government made loans more widely available beginning in 1992, students have been graduating burdened with excessive amounts of debt. So help your child carefully evaluate his or her borrowing plans and future ability to repay.

If you're the one doing the borrowing, take a close look at your repayment ability, especially if you're closing in on retirement. Also check your credit report to make sure it's accurate before you put in your loan application.