Try this one-liner on parents who have kids in college: September is "National College Savings Month."

I guarantee you won’t get a laugh. Not even a small guffaw. Anyone who’s just packed up a child--or, perhaps, multiple children--for college knows, “National College Spending Month" would be more appropriate.

According to figures compiled by the College Board, at public as well as private colleges and universities, total expenses--tuition, fees, plus room and board--rose 5.9% for the 2007-2008 school year. In-state students attending a four-year public institution are paying $13,589, on average, compared to $32,307 for a year at a private school.

Unfortunately, although you often hear students and parents bemoan the rising price tag for higher education, a new study by college loan company Sallie Mae (SLM), indicates that many are shouldering more of this cost than they need to. The reason? They’re simply not making the effort to fill out the Free Application for Federal Student Aid, a.k.a. FAFSA.

“Nine-out-of-ten families with income under $35,000 are doing the right thing and filling out the FAFSA form,” says Sallie Mae spokesperson Patricia Christel. But among families in the next income group--$35,000 to 50,000--this drops sharply. Only 76% complete the form, which she calls “your entrance ticket for getting free aid. Too many families are saying ‘It’s not worth my time.’”

According to Christel, even households with income up to $75,000 may qualify for aid, depending upon the number of children in the family.

Even if you aren’t eligible for grant money (the kind you don’t have to pay back), the only way to apply for low-cost student and parental loans is through the FAFSA. Currently, the interest rate on Stafford loans is 6.8% and “that’s for anyone, regardless of need.” If the student qualifies for a subsidized loan, the interest rate drops to 6%.

PLUS loans carry a fixed rate of 8.5%, according to Martha Holler, vice president of corporate communications for Sallie Mae. These parental loans can be used to cover any excess financial need after the student has taken out a Stafford loan. Anyone can qualify, “regardless of your credit score,” says Holler. “That’s what makes it so different from other potential loans.”

The number-one source of borrowing cited by parents last year was home-equity loans. Still, surprisingly few families--only 3%--relied on these. On average, this amounted to $11,000. However, three-quarters of those who tapped their homes to pay for college expenses plan to do so again this year. So, although this route is only being taken by a relatively small percentage of families, Holler says, “those using it are using it a lot."

Perhaps the most revealing finding to come out of the “How America Pays for College” survey is that parents and students are not factoring in whether a particular school is affordable. As Holler points out, “When you think of other life purchases that have a large price tax, you’d never think of buying a house or car without considering the price.”

Instead, the attitude among parents and students seems to be “whatever the cost, we’ll figure out a way to pay for it.” Then they load up on loans. They’re “not looking at how much the student will earn after college” when deciding how much to borrow, says Christel.

Perhaps that’s due to the nature of student loans. After all, they’re the only money you can borrow without proving you’ve got the income to pay it back. The problem is, 70% of families said they did not consider whether it’s realistic to think a new graduate will command the salary required to pay off those loans. And furnish an apartment. And buy a car. And afford work clothes. And….

Whether your child is in high school, college, or grad school, you need to have a frank discussion about cost- both current and future. Sallie Mae’s recently launched Education Investment Planner is a good place to start. It will let you model what it will cost to attend a particular college, construct a plan to finance it using a variety of sources, and “estimate the salary a graduate would need to keep repayment of student loans manageable.”

By the way, although Sallie Mae started out as a Congressionally-chartered agency much like Fannie Mae and Freddie Mac, the government cut it loose four years ago. It’s now a private corporation that makes both federal and private student loans and, according to Holler, is not facing the same credit issues that are wreaking havoc with its former “cousins” in the mortgage business.

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com, along with your name and phone number.