Avoid student loan stress

The thought of life alone, away from the parents is an exciting thing for many young adults, but funding the four years can be a reality check.

For the two thirds of students who borrow money to pay for their education, experts warn finding the funding is going to get tough.

Many college students like music major Lashera Moore are afraid they'll soon be singing the blues.

Moore depends on student loans, and from what she's hearing, it may get tougher to find funds she so desperately needs.

"I'm very worried because I can't even afford to pay the tuition," Moore said.

Experts warn the nationwide credit crunch fueled by the subprime mortgage crisis is now spilling over into student loans.

"There's a lot of uncertainty and there's a lot of potential for turbulence and turmoil in the student loan industry," Mark Kantrowitz with Finaid.org said.

"Lenders are cutting down on the number of loans they're making and trying to be more selective on the loans they're making," Haley Chitty with the National Association of Student Financial Aid Administrators said.

Private loans from banks and other lenders are expected to be most affected.

"Students may have a harder time getting private loans and we may see some cost increases as well, higher interest rates and fewer borrower benefits," Chitty said.

Moore is worried that even if she can find the funds the private loans she needs may get too pricey.

"It's going to get frustrating 'cause you have to go and find private loans and when you have to apply for it - you have to figure out, 'OK, what certain amount can I afford ,'" Moore said.

Students often turn to private loans after federal loans cap out. The government-backed programs typically have lower, fixed interest rates. Those funds aren't expected to dry up, but lending industry is seeing changes there too.

"We've already seen that with respect to many lenders who have just outright stopped offering federal student loans, some more recently, in the wake of the credit turmoil," Kevin Burns, Executive Director with America's Student Loan Providers, said.

Families with poor or no credit can anticipate the toughest time. If you're among the millions of families who've recently faced foreclosure, you can forget the popular federal PLUS loan altogether.

"One of the criteria for being eligible for a PLUS loan is not having had a foreclosure in the last five years," Kantrowitz said.

Experts stress there's no need to panic and there is money out there. To get what you need, of course, first search all the free money options like grants and scholarships. Exhaust all federal financial aid opportunities. If necessary, get a co-signer to reduce private interest rates.

If you haven't filled out the federal student aid form already, you're advised to do so immediately, and seek advice from private lenders to determine your financial need.

You might also want to consult the school's financial aid advisor for help finding the best possible loan package for you.