Are you already saddled with year after year of tuition hikes, college students and their families are facing a new financial squeeze: Fewer places to borrow money.

Tightening credit and higher costs have driven more than 40 companies from the college student loan business in recent months. Financial aid experts predict more up-front costs for student loan borrowers and expect that thousands of students will have to shop around this spring and summer for a new college student loan provider.

To add to the troubles, a once-common way of getting cash for college — home equity loans — are losing its appeal, thanks to the overall mortgage mess and dropping home values.

Without too much exaggeration, some types of college student loans will be more difficult and more expensive to get. Therefore, the cost of college will probably increase in the process.

In the past two months, four companies have stopped taking college student loan applications because they cannot get adequate funding through capital markets.

On Friday, college student loan giant Sallie Mae told schools that it no longer offers consolidation loans so that they may direct more of there resources to students entering school at a time when college student loan demand will significantly exceed lender supply for the upcoming academic year. Sallie Mae said this in a statement. Sallie Mae will also stop waiving loan origination fees beginning May 2.

Parents need to be aware of the situation unfolding and keep on top of it. When they look for a lender, they need to make a list of several and not just one. This is in part because of fast-rising tuition rates, college student loans are crucial to most students.

According to a resent study, 72 percent of students who graduated in 2006 from schools had to borrow to finance their education. They graduated with an average of $23,375 in debt.

Some college and universities have been spared the turmoil because these schools are part of the direct student loan program that leaves banks and loan companies out of the process. But other universities work with third-party lenders to secure federal student loans. These are the colleges and universities that are going to be affected.

There may be fewer lenders, but do not panic yet. I still think there are plenty of college student loans out there. I do not think it is necessary for families to be worried.

It certainly is not the end of the world. But college student loans are complex enough without adding another step. This being said, college student loans might come with fewer benefits. Currently, many banks eliminate origination fees for federal loans or provide interest-rate reductions or rebates for graduates who make timely payments. If those days are not over, they are certainly numbered.

It will also be more difficult for parents and students with poor credit to qualify for federally sponsored PLUS parent student loans and private or alternative student loans.

Taking all the above into consideration, you do need to do your homework and check out all your options. The internet is an excellent way to grow your knowledge in this area. You will be glad you did the research.

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