When it comes to college, it's the year of debt.

Prices continue to soar, with tuition now running an average $23,217 a year at four-year private universities and $6,185 at four-year public institutions, according to recently released findings from the College Board.

Those figures no longer trigger sticker shock. Rather, they're causing full-blown paralysis. More than half (54 percent) of families planning to send children to college have amassed a meager $5,000 or less to pay the tab, says the nonprofit group, College Savings Foundation, or CSF.

Many are simply resigned to years of debt. Four out of 10 families expect to spend at least a decade paying off college-related debt, and 82 percent think it will take five years.

That seems to be a realistic projection. The typical college grad now leaves school with $19,646 in school debts, according to The Project on Student Debt.

College debt was a much-debated issue in Washington, D.C., over the past year as lawmakers discussed what could be done about the high price of college. Recently passed laws, meant to protect families who borrow for college, start to take effect as early as 2008. Other legal overhauls are expected throughout the year, too.

Rates on government loans will drop in 2008, making it cheaper to borrow from Uncle Sam. Federal grants are due for immediate and long-term increases. Also, the private sector has been stepping in, with a few colleges, like Williams, Wesleyan and Bowdoin, announcing that they're eliminating loans as part of their financial aid packages.

The bottom line is that college costs aren't likely to drop in the near future, but there is some improvement. Smart students and their families will adopt up-to-date strategies to capitalize on new benefits so they can save as much as possible, borrow wisely and protect their bottom line as much as possible. Here's how:

Apply for financial aid ASAP 

That said, the first step is applying for aid by filling out the Free Application for Federal Student Aid, or FAFSA, which you can obtain from schools' financial aid offices or from the Department of Education's Web site.

You can submit your FAFSA any time after the New Year to apply for aid for the 2008-2009 academic year, but you don't want to drag your feet. You'll want to get it in ASAP, and certainly as soon as you complete your 2007 taxes.

"Most colleges do not award aid on a first-come, first-serve basis, but students who miss deadlines do miss out," says Sandy Baum, senior policy analyst at the College Board.

Once the FAFSA is complete, you may qualify for free grant money. This year, there's good news for those who get it. The federal Pell Grant for the nation's neediest students will rise to $4,800, up from $4,310. What's more, the grant also will grow steadily each year until 2012, when it will be worth $5,400. The hikes reverse a trend in which the Pell had been getting smaller in relation to tuition increases.

"We'll finally see some catch up for the lack of aid increase in the past," says Robert Shireman, executive director of The Project on Student Debt.

Those who qualify for the Pell may also be due for two new grants that were unveiled in the past year: the Academic Competitiveness Grant and the SMART Grant.

The Competitiveness Grant is worth up to $750 for the first-year undergrads and up to $1,300 for second-year students. The SMART, or Science and Mathematics Access to Retain Talent, is worth up to $4,000 and is open to Pell Grant recipients in their third or fourth year of undergraduate studies who major in math, science, engineering and the like.