Senator Eliot Shapleigh - El Paso, Texas

Mike and Kelly D'Addeo don't want their son Tony to take out loans to attend college. 'That's like graduating college and having a mortgage,' Mike D'Addeo said. With the credit crunch, even families willing to borrow money are having a harder time.

For years, Mike and Kelly D'Addeo planned to use their trove of Intel Corp. stock options to send their son Tony to a top college.

Tony would be a good candidate for any school: He's a straight-A senior at Bowie High School and captain of the football team, with near-perfect SAT scores. He's not interested in playing college football; instead, Tony talks about majoring in computer science or engineering.

"I'd like to have my own business someday," he said.

But the plunging stock market has made their stock options worthless and crushed the D'Addeos' Ivy League dreams.

"I feel bad that my son has the potential to go to a top-tier school — he's worked hard; he's earned it — and we are not able to provide that for him," said Mike D'Addeo, an engineer at Intel's Austin operations.

Across the country, other families are confronting the same harsh reality as they watch the stock market and credit crisis erode careful plans to pay for college educations.

Almost every method of paying for college has been affected. The sinking stock market has shrunk investment funds. A soft real estate market means families will have a harder time tapping the equity in their homes. And private student loans have become harder to find.

A recent survey by Fidelity Investments found that 62 percent of families — up from 53 percent last year — plan to get loans to pay college bills. But a third of those families said they didn't think they would be able to borrow as much as they needed.

"The ones with kids a couple years away from college are in the toughest position," said Joe Hurley, the founder of Savingforcollege.com, a Web site that promotes state-sponsored 529 college savings plans. "They have seen their accounts go down in value."

There were almost 9 million accounts in 529 plans nationwide in 2006, the most recent year for which data were available. The plans are popular because they offer substantial tax breaks. But financial data firm Morningstar Inc. said that all 79 of the plans it tracks have fallen this year, with 60 of them falling more than 10 percent.

All of the investment funds in Texas' 529 plan, the Texas College Savings Plan , with 25,000 accounts, have dropped in value in the last year, with a 3 percent loss in the more conservative funds to 45 percent drop in riskier investment options, according to the state comptroller's office.

Hurley said a lot of parents are faced with a tough choice: either move their money into more conservative investments and lock in their losses or keep the money where it is and hope the market rebounds.

But some parents, like the D'Addeos, can't salvage their investment choices and are adamant about their children not taking out loans.

"That's like graduating college and having a mortgage," Mike said. "You'd be in debt for the next 15 years."

Even families that are willing to borrow are having a harder time. Federal loans, which have lower interest rates, are still readily available, and Congress earlier this year increased the limit to $31,000 per undergraduate. But private loans have become scarcer as big lenders such as Bank of America and Wachovia Corp. have gotten out of that business.

"Some of it has been attributable to the credit crunch," said Henry Urick, the interim associate director of the Office of Student Financial Services at the University of Texas. He added that mainly out-of-state students and students interested in studying abroad will be hit the hardest because their needs are greater and more expensive.

"The federal loans may not be able to cover the costs," Urick said. "Facing fewer lenders and higher costs, these loans may require a co-signer."

Even though UT is considered one of the most affordable colleges in the nation, the cost of tuition, fees, and room and board for a Texas resident living on campus for one semester has risen 47 percent over the past five years to between $10,735 and $12,642.

Less expensive institutions, such as Austin Community College, have seen an enrollment boom, with 18 percent more students enrolled this semester than last year. Also, the number of students receiving financial assistance there is up — by 15 percent, which Kathleen Christensen, vice president of student support and success systems, said can be attributed to the economy.

Meanwhile, administrators at private universities are scrambling to keep their schools in the minds of college seekers and parents who might assume that the schools are too expensive.

St. Edward's University in Austin has an online financial aid calculator that determines each student's likely award.

"One of the things we have always tried to communicate with students and parents is the affordability of a private college in general," said Tracy Manier, the dean of admissions for St. Edward's, where tuition next academic year is $24,000.

Administrators at St. Edward's and other private institutions often tout the potential for tens of thousands of dollars in scholarships and grant money available to many applicants.

Still, some Central Texas families worry that the troubled economy means the end to plans to send their children to private colleges.

Wilson and Angela Day had counted on the rising value of their five-bedroom Avery Ranch home and money in their 401(k) to pay for college for their daughter, Sarah, who will graduate from high school in December 2009.

"We thought we could sell the house for the equity we had and use that," Angela Day said. But that has taken a hit. "A year ago we had $100,000 in equity, and now we have $40,000," she said.

Don't even get Day started on their 401(k)s, which lost 25 percent of their value in one month.

"We did move some over into more conservative bonds," she said.

Sarah wanted to go to a small private university outside Texas, her mother said, but the economy led the Days to change their plans.

"At first, we were trying to talk her out of it," she said. "And then it was reality: 'No, I'm afraid not.' "

Sarah is now looking at schools closer to home. Like the D'Addeos, the Days don't want their daughter to take on student loan debt. Instead, they are watching their portfolio and wondering whether it will regain some of what it lost.

"We can only hope, right?" Angela Day said.

In Southwest Austin, Tony D'Addeo has shifted his focus to less expensive schools as his parents look into other options, such as the Air Force Academy or the highly competitive Olin College of Engineering near Boston, which accepts only 75 students a year but gives all of them full-tuition scholarships.

Tony says he is open to an education closer to home, especially because most of his classmates are remaining in Texas.

"I'm a Longhorn fan," Tony said. "I could see myself going to UT."

Finding financial aid help

www.savingforcollege.com

The site offers an overview of savings plans for college, with a focus on what a 529 is and which states offer 529s.

www.texascollegesavings.com

Look here for information on Texas' 529 plan, which is managed by Oppenheimer Funds Inc.

www.texastuitionpromisefund.com

This site explains Texas' prepaid tuition plan, which enables parents to lock in current tuition rates. Students must attend a two- or four-year public college or university in Texas.

www.finaid.org

A comprehensive Web site on all facets of applying for financial aid, including grants, loans, military aid and scholarships.