Even as college costs soar, the credit crunch is about to make student loans more expensive—and tougher to come by. Fees for federally guaranteed loans, which offer below-market rates, are expected to rise, and some states have dropped out of the program. At least a dozen private firms have already abandoned the student market, and those rates will rise even faster, the Washington Post reports.
Students at community colleges and for-profit schools, which have the highest default rates, will get hit hardest. "Right now the securitization market for private loans is not there," said a spokesman for Sallie Mae. It doesn't help that Congress cut subsidies to the federal loan program last year: They were "clearly not designed for times like these," said a loan provider spokeswoman.