LJWorld.com

There is good news and bad news for college students who are seeking student financial aid.

"Right now if students are looking for federal direct loans, they can get them," Kansas University spokesman Todd Cohen said.

The bad news: If you are seeking a loan from a private financial institution, perhaps to supplement your federal loan, it might be a little harder to get, said John Dean, special counsel to the Consumer Bankers Association.

"It is clear that the credit standards have tightened so that a student who received a loan last year would be less likely to get one this year, and if they did receive one, the cost might be higher because of the overall credit crunch," Dean said.

A variety of federal loans are available, and college financial aid offices will help students apply for them. There also are a variety of loans from private institutions. Interest rates vary, but private loans are more expensive than federal loans, Dean said.

The interest rate on federally subsidized Stafford loans for undergraduate students will drop over the next four years. It will decrease from 6 percent to 3.4 percent, according to the U.S. Department of Education's Web site.

Interest rates on private loans change quarterly but can range from 7 percent to 14 percent, according to the KU Office of Student Financial Aid Web site. KU doesn't endorse specific private institutions, but a list of lenders most frequently selected by KU students is on the Web site www.financialaid.ku.edu. Private lenders continue to offer and approve loans to KU students, Cohen said.

The bankers association doesn't have corporate specific information about student loans, but it is hearing anecdotal reports that students face difficulty finding nonfederal loans, Dean said. One factor is the nationwide decline in home values, he said. Families that previously borrowed to meet education costs through home equity loans may find that now, there is insufficient home equity to borrow against.

"They may not realize that until they try to draw down on the line of credit," Dean said. "A number of institutions have curtailed home-equity loans for reasons not related to the student loan business."

A student's chance for a private loan increases if there is a co-signer, he said.

"It is going to be a matter of the creditworthiness of the borrowers," Dean said about obtaining private loans.

Private loans are not subject to federally subsidized insurance as are the federal loans.

In 2007, 16,549 KU students received more than $165 million in federal and private financial aid awards, grants and scholarships. The average amount per student was $9,988, according to KU.