The credit crunch known to be affecting mortgage seekers is not applicable to students looking for private student loans for college.  The crunch is defined as the restriction of lenders and banks to give loans because they are concerned that borrowers won’t be able to pay it back. Losses are occurring in these groups because homeowners have slipped in making regular mortgage payments.

            Federal student loans are controlled by the government, which regulates how they’re distributed. Private Student lending standards have a higher esteem than mortgage standards, which have recently been negligent in making sure customers pay their bill on time and compromising underwriting.  Interest rates will not change for student loans either, because they are set by Congress and have nothing directly linking them to market changes.

            The College Board’s 2006 data states that federal loans, grants, tax benefits, and other federal programs are 70 percent of the nation’s financial aid, while it is five percent for state grant, 18 percent for institutional grants, and seven percent for private sources. Rates may increase with weakening of overall credit, but it has little to do with accepting people in search of loans, grants or private student loans.