How am I paying for my kids college? Well, I am saving now, 12 years before the first bill is due. 

 Lots of luck. We started saving when our kid was in elementary school. College costs have risen faster than we can save for it. There are grants and scholarships out there and they do make a difference.

 The Median American family makes LESS today than in 2000

For Many, a Boom That Wasn’t

How has the United States economy gotten to this point? It’s not just the apparent recession. Recessions happen. If you tried to build an economy immune to the human emotions that produce boom and bust, you would end up with something that looked like East Germany. The bigger problem is that the now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500.

This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew while the economy did. You can think of this as the most basic test of an economy’s health: does it produce ever-rising living standards for its citizens?

In the second half of the 20th century, the United States passed the test in a way that arguably no other country ever has. It became, as the cliché goes, the richest country on earth. Now, though, most families aren’t getting any richer.

“We have had expansions before where the bottom end didn’t do well,” said Lawrence F. Katz, a Harvard economist who studies the job market. “But we’ve never had an expansion in which the middle of income distribution had no wage growth.”

http://www.nytimes.com/2008...

 The Federal Student Loan Programs (Federal Stafford, Federal PLUS, etc.) are regulated by the Federal Government (commonly referred to as "The Feds", i.e Congress and the President). Regulations have been passed which made some significant changes. Some lenders which have participated in the programs are pulling out because they are no longer making the profit they once were. Also, there have been no significant increases in annual student loan limits (which are also regulated by The Feds) for a long, long time (in 1992, the annual loan limit for base Stafford loans for graduate students increased from $7,500 to $8,500, and in 2006, the Higher Education Reconciliation Act increased the base Stafford amounts for first year students from $2,625 to $3,500 and for second year students from $3,500 to $4,500). It's also important to note that, while the ANNUAL loan limits increased by a tiny amount, the TOTAL loan amount that undergraduate students are allowed to borrow during their whole college time stayed the same. So you can see a few of the problems which have to be fixed by The Feds. But the good news is, as far as Federal Loans go, they should be available to all eligible students who want them, regardless of the "credit crunch".

Now for the private educational loans... Since the Federal Loan Programs haven't increased the way college costs have (think back to college tuition in the 80s versus now), lenders started offering "private" or "alternative" educational loans to supplement the Federal Loans. These are based on credit history and ability to repay, so lenders can pick and choose who actually gets them. And when the economy is down, they select only the "highest quality" borrowers to receive the loans. This, of course, impacts those students without credit-worthy co-signers, or anyone else who will be denied these loans.