If your clients have dependent children, chances are they've endured more than a few sleepless nights. If they're thinking about how to fund their college educations, especially if those children are already teenagers, they've likely developed full-blown insomnia.

Average nationwide sticker prices for the 2010-11 academic year-including tuition, fees and room and board-total approximately $16,000 for in-state public schools, $28,000 for out-of-state public schools, and $37,000 for private schools, according to the College Board's Trends in Pricing 2010 report. A growing number of elite private schools sport price tags above $50,000.

"The numbers can be very scary for families," says Michael Beloff, CFP, a financial advisor with MetLife's Barnum Financial Group (BFG) in Shelton, Conn.

Advisory clients may be among those most spooked. While the College Board reports that just one-third of full-time students actually pay the full published tuition price without receiving grant assistance, moderately affluent clients are likely to find themselves in that camp-even if full sticker price is well beyond their reach.

If their kids are headed to college soon, they also may not fully recoup the losses in state-sponsored 529 college savings plans they've set up for them. The typical 529 plan lost almost 24% of its value in the 2008 market crash, according to Morningstar.

The share of parents turning to financial advisors for college concerns this year has jumped to 33%, up from 28% last year, according to Fidelity Investments' fourth annual College Savings Indicator study. Advisors are also providing broader college guidance beyond accumulating savings and distribution strategies. Almost twice the number as last year are now helping clients research schools (25% vs. 13%), navigate the grant process (30% vs. 16%) and secure financial aid (37% vs. 20%), the study found.

To help boost their college knowledge, Beloff and five of his BFG colleagues earned the Certified College Planning Specialist (CCPS) designation this summer from the National Institute of Certified College Planners. NICCP has provided college funding training and education to about 1,900 financial professionals since its establishment in 2002, says co-founder Rick Darvis, CPA.

BFG also recently joined forces with College Insights, a Freehold, N.J.-based independent college advisory firm, to launch BFG's Center for College Planning. The center, which holds seminars at high schools and community centers, is open to the general public. BFG advisors can also use the center's tools with their own clients.

"It's like a minefield to navigate this college planning maze. 'How am I going to afford it?' is the most common question I hear," says Perry De Fontaine, CPA, president of College Insights and a financial advisor with BFG.

Using a comprehensive college funding process is only one of the keys to college success, says De Fontaine. The first factor, he says, is finding the best college for your children so they stay and graduate-something 42% of students fail to do in six years, according to the Department of Education National Center for Education Statistics.

Other factors he says should be addressed: preparing and positioning a student to be attractive to colleges, finding the right college for your pocketbook by using other people's money (through financial aid, gifts and education tax strategies), and going through the financial aid process to gain access to the most money available.

To get any money from the government or schools, including most merit scholarships, families must fill out the federal Free Application for Financial Aid (FAFSA) form, says De Fontaine. Everyone should also find his or her own Expected Family Contribution (EFC). There's an EFC calculator on the College Board Web site (www.collegeboard.com). De Fontaine also urges FAs to share this "golden rule" with clients: Find out the financial aid process, forms and deadlines for each school being considered. There is no standard.

Darvis, who also owns College Funding Inc. in Plentywood, Mont., suggests families work with their tax accountants. "College is a cash-flow problem any way you slice it ... even for six-figure incomes," he says. Educational tax strategies available to small business owners include putting their lower-tax-bracket kids on the payroll and implementing a tuition assistance program.

Funding Methods
Despite their market risk, "over time, 529 plans are the most effective vehicle to save for college," says Andrea Feirstein, founder and managing director of New York-based AKF Consulting Group, the leading strategic advisor in the 529 college savings market.
In addition to offering tax-free compounding and tax-free withdrawals at the federal level, 529 plans layer on state tax benefits in many states and provide parents with control and flexibility, she says. They may be used for any post-secondary institution that accepts financial aid, including some schools abroad. Parents can select a new beneficiary, even themselves, if the original plan beneficiary decides to forgo college.

In contrast, funds gifted into a Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) custodial account may not be transferred to another beneficiary and the minors get to decide how the money is spent once they reach age 18 or 21.

Unlike some other college funding tools, 529 plans don't impose federal income restrictions, and maximum contribution limits currently range from $235,000 to $370,000. There are 95 plans available, 59 directly to individual investors and 36 through financial advisors. The biggest trend over the past year, according to the September 2010 AKF Market Report, has been the growth in short-term, Treasury-protected and federally insured choices. AKF also anticipates the trend of fee reductions to investors will continue during the next round of program management rebids.

To learn more about 529 plans, Feirstein suggests visiting www.savingforcollege.com and www.collegesavings.org. Investors and FAs should always begin their research with the 529 plans offered in the state where the account owner (or beneficiary) resides or pays taxes because there may be specific state tax benefits or other advantages, she says.

Clients should understand the cost and potential return differences between indexed and actively managed investments, aggregate limits, how insurance aggregation rules apply to federally insured options and early withdrawal penalties for any investment, she says.

While starting to save for college the day Junior is born is best, "I tell every parent, 'Don't kid yourself, it's never too late,'" says Feirstein. "Federal tax-deferred compounding is a very powerful tool." Clients should be encouraged to put themselves on a regular savings plan rather than wait for that one-shot-a-year big contribution, she says.

Investors may also accelerate gifts up to five years at one time in a 529 plan without a gift tax, which is useful if someone sells a house or receives a windfall inheritance, she notes. Annual gifting allowances are now $13,000 as an individual, $26,000 as a married couple filing jointly.

"There are lots of odd ins and outs with 529s (for example, they're considered a completed gift outside the parent's estate but are part of the parent's assets on the FAFSA) ... but they're a great place for the college bucket," says Beloff.

To help reduce market risk, he suggests looking at target-date or aged-based options that shift assets to more conservative investments as kids get closer to college age. For example, New York's 529 College Savings Program Direct Plan, managed by Vanguard, shifts its moderate age-based option to a conservative growth mix (25% stocks, 75% bonds) when beneficiaries are age 11 to 15, and later replaces the stock portion with money market investments.

Beloff says three fee levels should be considered with 529 plans: the underlying mutual fund expense fee, the program fee (for rebalancing, asset mix selection and administration), and a commission fee for advisor-sold funds. With advisor-sold, advisors should review whether Class A shares or Class C shares are appropriate given the age of the beneficiary, he says.

If a client's state doesn't offer a tax deduction, there are really no reasons to stay in state, says Beloff. He does note that it's difficult to compare 529 plans across state lines since fund companies may break down age bands and conservative/moderate/aggressive investment mixes differently.

In addition, most states only offer single fund family platforms. Looking out of state? You may want to go with a fund family you like, he says. A more transparent 529 plan such as American Funds may appeal to clients interested in picking their asset allocation and specific funds rather than being assigned an age-based portfolio.

If a child is already well into high school, a parent really won't be able to leverage the tax savings 529 plans offer. "But if ultimately you need a forced-savings plan, a 529 plan may be good even late in the game if the fee structure is OK," says De Fontaine. At that point, it makes sense to use the least expensive fee structure, he says.

Some other college funding sources include zero-coupon bonds, Roth IRAs, Series EE savings bonds, cash value life insurance, UGMA/UGTA accounts, and Coverdell Education Savings Accounts (ESAs). "Pros and cons [for each] must be analyzed client by client," says De Fontaine. About a dozen states also offer 529 prepaid tuition plans that let parents lock in tuition costs at the state's public colleges and universities.

Beyond Savings
Understanding which schools have money and which ones don't is another important step to help reduce college costs, says De Fontaine. Information sources include The U.S. News & World Report Ultimate College Guide and the Collegeconfidential.com forums.

Finding what kind of money schools distribute to students is tougher, though De Fontaine suggests starting with the Ultimate College Guide. Some schools give just need-based aid; others may give more money to the top academic achievers, he says. A variety of sources provide freshman class academic credentials including Collegeboard.com, U.S. News and Princeton Review. Extracurricular activities can count a lot too. Research what schools are looking for a tuba player or whatever else a child may excel in, says Beloff.

Parents shouldn't be afraid to appeal to a college's financial aid office for more aid than what's offered, says Darvis, who's seen a number of success stories. The good thing about need-based and merit aid, in De Fontaine's experience, is that once students receive it it's often given for four years. "The myth is you get in and they pull the rug out, but I don't find that to be true," he says. For need-based aid, parents must show their financial picture every year.

Most importantly, Beloff and the others emphasize the need to keep the college and retirement buckets separate. "You can always finance college, not retirement," says Feirstein. Beloff adds, "You don't need every dollar saved on Day 1 of freshman year. You need to see how much you can work out of pocket."

Interested in building a college practice? "Create your own team of specialists," suggests De Fontaine. For example, find a local tax preparer who really knows education tax law. Also perform due diligence and ask for track records of success of any college planning specialists in your community who you may be interested in forming a relationship with, he says.