A proposed National Student Loan Sunshine Act, which hasn't yet been passed by the Senate but is expected to pass and become law in early 2008, would require private lenders to more clearly divulge their repayment terms. This would include rules that force banks and the like to state how high the interest rates on their variable loans could grow over the life of someone's loan.

The Sunshine Act also seeks to ban so-called "co-branding" of private loans that boast the name of a university but are really offered by banks. Critics say these loans, which are made available to students through their financial aid offices, give the appearance of being vetted by schools, and possibly being the cheapest available, though that may not be the case.

So tread lightly before signing the dotted line on private loans. Ask tough questions, like finding out if your lender puts caps on interest rates. (For more tips, see Bankrate's guide to private loans.)

Bear in mind that experts recommend families use a PLUS loan to obtain necessary funds for college if the Stafford isn't adequate. This will ensure they get a fixed-rate deal.

Start saving now 

"The single biggest reason families aren't saving is because there's this misperception that they'll get financial aid," says Mazareas. "Or else parents feel inertia. They wonder, 'How do I get started?'"

The answer to that question is a simple one. You take baby steps.

After all, 2008 probably won't be the year you reap in mega lottery winnings. But it can be the year you make a commitment to save regularly. If you can have automatic deductions taken from your paycheck or savings account on a monthly or weekly basis, you'll do more for funding your future than waiting for the day when you can afford to set bulk sums aside.

Let new 529 features work harder for you 

Not only are 529s affordable, they enable your savings to grow tax-free over time. Earnings are taken out tax-free if they're used for higher education costs, such as tuition, room and books.

These benefits have been drawing investors to 529s for years, and assets in plans now total $104.9 billion. Nevertheless, only one out of three families has opened a 529, and states that sponsor 529s, which are run by fund companies like Vanguard, T Rowe Price, TIAA-Cref and Fidelity, are working hard to attract individuals with a slew of improvements.

Most notably, plans are getting cheaper. In general, direct-sold 529 plans, which you open by contacting the plan management yourself, are less expensive than broker-sold 529s, which are obtained via middlemen.

But recently the industry has seen lower fees overall, says Marta Norton, a mutual fund analyst at Morningstar. In the past year, for example, fees have been lowered in 529s offered in Alaska, Illinois and West Virginia, among other states.

"The competition is more fierce, and there's a lot of fine-tuning being done to them," says Norton. "There's a lot more industry awareness of what other 529 plans are doing and consumers are going out and comparing what's out there."

It's also getting easier to claim a tax break with a 529. Currently, 34 states allow residents who participate in their sponsored plan to deduct all or some of their 529 contributions. That said, you don't have to fund a 529 sponsored by your home state.