The past year's stock market drop has eroded more than $10,000 from the money Kostrzewa invested in a state college-saving fund known as a 529 plan.

"I'm going to need it in two years," she said. "Everyone says to be wise, start saving when they're little. I would have been better off putting it under the mattress."

Most college-savings plans haven't dodged the Wall Street devastation -- the Dow Jones industrial average is down 40 percent from its high a year ago.

If the downturn is prolonged, it also could hurt future generations' ability to afford college.

Nationally, 529 plans had $109 billion invested last year. Preliminary figures from Financial Research Corp. show the value declined 8 percent last quarter -- and that was before the recent stock slump.

The 529 plans offer tax breaks to encourage parents and grandparents to save money for children's tuition, books and other college expenses. Although the money can be transferred to related beneficiaries such as younger siblings, the severe declines are still worrisome for parents who will need the money soon.

"It's an investment like any other, and we try to make sure people understand there are no guarantees," said Jim Sutton, program services manager for the state's 529 plans.

"We would love to be able to say you're not going to lose any money, but that's not the case. Obviously, this is the worst we've seen anywhere, anytime."

The foundation's representatives cannot give financial advice, only information about the various funds and how 529 plans operate. Parents fretting about their choices should contact a financial adviser, Sutton said.

"We don't have the training or the background to go over someone's finances," he added. "We don't have any knowledge about the rest of their financial situation."

That annoys Kostrzewa, who believes that the state's sanctioning of the plans gives the appearance of safety and stability.

"For most people, there's a complete trust factor when they give the state their money," she said.

Kostrzewa's money was in the most aggressive fund offered by the College Foundation of North Carolina. It was the worst-performing fund for the year ended Sept. 30, losing 32 percent, and eating into Kostrzewa's principal, not just earnings.

For now, Kostrzewa, who works as a lobbyist in Raleigh for liquor companies, libraries and other clients, plans to leave her money where it is. She will use loans and other savings to pay for her daughter's early years of college, with the hope that the 529 plan money will rebound.

"It doesn't make any sense to move it now, then I'm stuck with my loss," she said.

"I have the luxury of being able to ride out the market."

The slumping national economy, floundering stock market and increasing jobless rate are expected to dampen parents' enthusiasm about saving money for school.

Experts often recommend parents first save for retirement, with the assumption that children can get government grants, cheap loans and other aid for college.

The state's 529 plans, despite recent losses, still earn strong recommendations from Savingforcollege.com, a research Web site. It ranks North Carolina No. 19 for one-year performance through June 30, and No. 14 for three-year performance.

Shauna Hay and her husband started saving about six months ago. They had finally paid off their own student loans and wanted to put money aside for their two children, one in kindergarten and the other nearly 2 years old.

The Carrboro couple picked the North Carolina 529 plan for its tax breaks. Hay said she's leaving the money in funds that are invested heavily in stocks, despite the recent losses.

"This is a rough period," Hay said. "Fortunately for us, our children are young; we have some time still."