Of course you want to be able to pay for your child's college education. Who doesn't? It's the American dream, right? For those who can afford it, paying for college for the kids outright is a great thing. For most middle-class Americans however, the thought of paying the bill for four years of higher education or taking on more student loan debt can be downright nightmare-inducing.

Here are some things to remember when planning for your children's college education:

1. Start setting aside money when they are young if you can, but it's never too late to start. Look for a 529 plan that will let you save tax-deferred money for your children's education.

2. Apply for every scholarship you can find. Start researching scholarships and involve your college-bound child in the process. As soon as your child is a junior in college, start looking for scholarships. Make it your child's job to apply for any scholarship you can find, no matter how big or how small. Those $500 scholarships can add up quickly!

3. Fill out the FAFSA application--The Free Application for Student Aid. The completed application will determine what sort of federal aid your child gets to attend college, including Pell Grants, Stafford Loans, PLUS loans, and work-study programs. Even if you think your child won't qualify, nearly every college student can get some form of aid.

4. Don't sacrifice your own future to pay for college. Don't forego funding your own retirement account in order to pay for your child's college. Think of it this way. Your child can get loans to pay for college and then work for years to pay them off, but you can't get a loan for retirement and work to pay it off.

5. If grandma and grandpa want to help with college, consider the best way to do this. If they pay tuition directly to the school, the money is not eligible for the gift tax. They can give cash for school up to $11,000 without paying the gift tax, and couples can give $22,000.