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For those of you who will be still in school next year, or will be returning to school, 2008-2009 could prove to be a difficult year to get student loans. With the credit bubble bursting many loan providers are closing their doors or doing some belt tightening, which can mean you are left searching for a new loan provider.

According to Mark Kantrowitz of Finaid.org, “Pennsylvania’s higher-ed agency last month suspended their student lending. Numerous other private sources have exited as well, due to a profit squeeze.”

While not every lender is bailing out of the student loan game (for example Federal Stafford and PLUS loans will still be available), many are tightening their standards. Where in previous years a credit score of 620 for the student or cosigner was needed, that may be getting raised to 650 this coming year. What does this mean for you then?

As reported in a recent Newsweek article “Sallie Mae, the nation’s largest lender, might turn you down if you have a high debt load or your school has a high dropout rate. [Families] should call your school right now and see if your usual lender is providing funds. If not, start the hunt for other sources. You don’t want to be scrounging during the week before tuition is due.”

There are some other options as well, and as with all money matters it pays to shop around and see what kind of rates you can get elsewhere. Stafford loans carry a maximum percentage of 6.8%, which will be reduced by law for subsidized loans to 6% on July 1. You can find some better rates out there though, such as from MyRichUncle.com, which offers a 5.8% rate and may be cutting rates to stay ahead of the Stafford rates.

The major lenders out there are Sallie Mae, Citibank, Bank of America and Wells Fargo so get in touch with your school and check on your loan status for next year now. If you have to look around for a new lender, make sure to do your homework and try to negotiate the best rate possible. Just because the market is squeezing out some of the lenders doesn’t mean you have to accept whatever offer your lender gives you. In cases like these, it pays to do your homework.

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