San Diego Business Journal

Dear George: My son is headed for college next year and it looks like we're going to need some financial aid. Where do I get started?

, Martin, San Diego

Dear Martin: Of course, it would have been a good idea to get started about 18 years ago. As the father of two children who are both seniors in college I can give you , and especially parents with little kids , some wise advice: no matter how much money you save, it won't be enough.

Tuition is just the tip of the iceberg. Books, clothing, rent, telephone, tutoring. It just keeps coming at you.

The good news is that there are many sources to help you pay for college. Ideally your son will qualify for a scholarship or grant. But, as an alternative, you can apply for a number of loan programs.

The first thing that needs to get done is the completion of the Free Application For Student Aid (FAFSA) forms. You have until June 30, 2000 to submit this application but the sooner you get it in the better your chances of getting the right kind of aid. Financial aid packages are awarded on a first-come, first-served basis.

This is the first step in determining if your student is eligible for federal or state aid. Many private awards are only given after a student has been rejected for government assistance.

To learn more about the FAFSA program and to download forms go to the web site for the Smart Students Guide to Financial Aid (www.fafsa.org).

Another source of aid may be the company you work for. Many employers will invest in the education of their workers and their families.

Let's go back to the earlier point about getting an early start on paying for education. California has finally initiated what is called a 529 savings plan, referencing the tax code law that allows for these plans. The Golden State Scholarshare Trust provides a tax-favored plan for saving that does not have the contribution limitations of the so-called Education IRA.

The program allows for regular payroll deductions for as little as $15 per pay period. The funds are then invested in a diversified program that contains stocks, bonds and other financial assts. The program is administered by TIAA-CREF, the largest retirement and educational planning company in the United States.

For more information call 1-877-SAV-4EDU or visit the Web site at (www. scholarshare.org).

Dear George: I'm thinking about adding an index mutual fund to my portfolio. However, I worry that if there is a big decline in the market I won't have any protection. Any way to protect my portfolio?

, Wendy, Carlsbad

Dear Wendy: I have never been the biggest fan of index funds, funds that are absolute clone of major market barometers such as the Standard & Poor's 500 Composite Index.

It is hard to argue with the gains that these funds have generated in recent years. Quite honestly, there is no better place to be when the market is in a good old-fashioned, rip roaring bull charge. However, if and when the bears take over, you have no protection. Index funds can only follow the direction of their stocks.

To provide a bit of protection many mutual fund families are creating funds that combine the best of both worlds , an index fund that also includes a managed component. For instance, Strong Funds has a Dow 30 Value Fund. It places a portion of the investor money into a clone of the industrial average. The rest of the money is available to the manager to select a few stocks in the index that are considered to represent current value.

Most families, including index pioneer Vanguard, have launched this type of fund. While it is a little too early to measure their effectiveness they do deserve investor consideration.

Chamberlin is the host of "Money in the Morning," heard weekdays from 9 a.m. to noon on Ksdo.com A/M 1130. Send letters to P.O. Box 1969, Carlsbad, CA 92018, or E-mail him at (george@,moneyinthemorning.com).