03/13/2013 01:07 pm ET Updated May 13, 2013

Smart Strategies to Beat the Student Loan Conveyor Belt

Today's college students and their parents might feel like they are on a conveyor belt leading to heavy student loan debt burdens. Most people believe a college diploma is necessary to land a high-paying job, but don't want to use all the money from that job just to pay off student loans. While it might seem like taking loans is the only way to cover college costs, there are several smart strategies families and students can use to reduce the money needed and get off the student loan conveyor:

Long-Term Savings: Parents and children can work together to put aside a set amount of money at regular intervals and watch it grow as the child grows. Tax refunds or work bonuses can be added to give an extra bump to the amount being saved. College Savings Bank offers a CollegeSure CD, an FDIC-insured certificate of deposit that is indexed to college costs.

529 Savings Plans: According to the College Savings Plans Network investors have placed more than $179 billion in these tax-advantaged accounts. While funds accumulate over the child's life, the plan owner is able to withdraw the investment free of federal taxes to pay for qualified higher education expenses.

Pre-Paid Tuition: These are state-sponsored versions of 529 plans that are guaranteed to increase in value at the same rate as tuition. Parents lock in tuition rates now, with no risk to principal.

Cash Value Life Insurance: Some parents tap into the cash value of life insurance policies and realize certain tax and financial aid advantages. The cash value of a life insurance policy grows tax-free and the amount of cash value that is made up of premiums can be withdrawn tax-free. In the first year of financial aid calculations life insurance is not counted as an available asset.

Roth IRA: Other parents use a Roth IRA as a savings vehicle since the money also grows tax-free and can be withdrawn tax-free if used to cover college costs. Funds in a Roth IRA do not affect financial aid calculations, but there may be investment and income limits to this savings vehicle.

Advanced Placement Classes: These are classes that are taken in high school that offer college credit upon successfully passing a year-end examination. There are usually no to minimal additional expenses for enrolling high school students in these classes.

Military: Since World War II generations of students have relied on the military to help pay college costs after their service. Those who join ROTC or enter certain professions may also be able to have their college costs completely paid in exchange for military service.

Financial Aid Is an Important Part of Paying for College

While these are excellent tools, some savings accounts may have been diminished by the recession or just aren't able to cover the anticipated costs of attending the student's desired school. Some of these costs may be made up by merit scholarships offered by the institution based on the student's academic and other achievements in high school.

After that, financial aid comes into the picture. For most parents and students this starts with the completion of the Free Application for Federal Student Aid (FAFSA). This form can open the doorway to billions of dollars in federal financial aid, grants and work-study programs as well as state and university funding. Those who are confused by this process should consult a professionally trained college financial aid advisor for assistance. Plan ahead and act wisely, and you can get off the conveyor belt to student loans and on the road to college.