If you're faced with college costs, either now or down the road sometime, there's been lots of good news lately. For starters, although tuition is still on the rise, the annual rate of increase is much less than it used to be. Plus, the federal government, along with the states, has been busy rolling out tax breaks and tax-advantaged college savings plans. Here's a quick rundown of the new options, including an update on the traditional sources of assistance:

Education IRAs. These so-called IRAs are more appropriately called education investment accounts. Those who meet the income limits, including parents, grandparents, and children themselves are eligible to contribute up to $500 a year on behalf of a child under age 18. (A child can have more than one education IRA, but the total contributions in aggregate to all of a child's accounts can't exceed $500 a year.) Contributions aren't tax deductible, but when college rolls around students can withdraw the money tax free to pay the costs of qualified higher education expenses.

If you're a married taxpayer who files jointly, with modified adjusted gross income under $150,000, you qualify for the full contribution. If your income is between $150,000 and $160,000, you qualify for a partial contribution. If you're a single taxpayer, these limits are $95,000, and between $95,000 and $110,000 respectively.

College Savings Plans. Almost all states now have some type of program that offers a tax-advantaged way to save for future college costs. Most of the programs are new or improved on the heels of favorable tax legislation, and most accept contributions from both parents and grandparents, among others. Each plan has its own terms and benefits, but many allow students to use the savings for any accredited college in the U.S without penalty.

There are two main types of plans: Prepaid tuition plans either guarantee that your savings will be enough to cover future tuition at a public college in your state, or guarantee that your savings will equal the estimated average tuition cost of public colleges in your state. College savings trusts are state-sponsored investment accounts, with returns based on the investments the state has chosen for the entire plan.

Federal income tax credits. The Hope credit is for each of the first two years of college tuition and fees, up to a maximum of $1500 a year per student. If you have more than one student in your family you can claim a credit for each. The Lifetime learning credit is for college undergraduate and graduate expenses, as well as for some vocational training. The maximum credit is $1000 per taxpayer, and you can claim the credit for an unlimited number of tax years.

If you're a married taxpayer who files jointly, with a modified adjusted gross income under $80,000, you qualify for the full credits. After that, the credits gradually phase out until your income reaches $100,000. These thresholds are $40,000 and $50,000 respectively if you're a single taxpayer.

Student loan interest deduction. If you're eligible, you can deduct from your federal taxes up to $2000 in interest you paid during 2000 on any qualified education loan. (The maximum deduction was $1500 for the 1999 tax year.) You can only take the deduction for the first 60 months of interest payments you paid.

If you're single, you qualify for the full deduction if your modified adjusted gross income is less than $40,000, and for a partial deduction if your income is between $40,000 and $55,000. If you're married and file jointly, these limits are $60,000 and between $60,000 and $75,000 respectively.

Federal financial aid. The federal government is the largest single source of financial aid, providing about 75% of all dollars, mostly in the form of loans. Federal aid is available for both students and parents.

Pell Grants and Federal Supplemental Educational Opportunity Grants are awarded only to students with exceptional financial need, as are low-interest Perkins loans. Stafford loans for students, which carry relatively-low interest rates, come in two forms: Subsidized Stafford loans are awarded based on financial need, and students are not charged interest until they begin repayment. Unsubsidized Stafford loans are non-needs based and are available to all students who meet the general eligibility requirements. However, because these loans are unsubsidized, students are charged interest right from the time they receive the loan. Federal Work Study provides on- and off-campus part-time jobs for students with financial need. And PLUS loans are for creditworthy parents who meet the general eligibility requirements.

State government aid. Each state has its own aid programs, which may include grants, scholarships, loans, and work study. Some programs are based on financial need, while some are based on other criteria, such as academic performance. High school counselors and state Departments of Education are the best sources of information about state financial aid.

College and university aid. Colleges and universities have their own aid programs, which may include grants, scholarships, loans, student employment, tuition-savings programs, and cooperative education. Aid may be based on financial need, academic performance, proposed field of study, special talents or abilities, or some combination of these or other factors.

Private aid. Grants, scholarships, and loans are available from foundations, religious organizations, employers, and community organizations, among others. Some programs offer assistance to all families, some base aid on financial need, and others base assistance on special criteria, such as academic achievement, special talents, athletic ability, proposed field of study, ethnic heritage, or community activities. Scholarships from these private sources are often for small amounts and represent only a small percentage of the financial aid awarded each year.

For more information

State-sponsored college savings plans: The College Savings Plan Network, www.collegesavings.org, toll free 877-277-6496.

Federal financial aid: The Student Guide: Financial Aid from the U.S. Department of Education,www.ed.gov, 800-433-3243

Free financial aid searches: The Financial Aid Information Page www.finaid.org, FastWEB (Financial Aid Search through the Web) www.fastweb.com, The College Board www.collegeboard.org.

Education IRAs, education tax credits, and the student loan interest deduction: IRS,www.irs.gov, Publication 970, Tax Benefits for Higher Education, 800-829-3676.

Take note of these rules: For any one tax year, you can elect only one of the following for the same student: 1) Hope credit, or 2) lifetime learning credit, or 3) tax-free withdrawals for college expenses from an education IRA. Likewise, you can't make contributions for a child to both an education IRA and a qualified college savings plan in the same tax year.

What's more, since college savings plan accounts are in your child's name, it's still uncertain whether the money you accumulate may affect eligibility for needs-based financial aid. And if you claim either the HOPE credit or lifetime learning credit, you can't claim the federal tax break on a U.S Savings Bond's interest earnings if you cash in bonds to pay those same education expenses.