Although the credit crunch has made student loans a bit harder to find, Indiana college students still have options when scholarships and financial aid don’t cover their education costs, according to Linda Handy, director of financial aid at the University of Indianapolis.

Nationwide, more than 100 private lenders have dropped out of the student loan business, but thousands remain, Handy says, and the federal government has taken several steps to help keep lenders in the market. Indiana, home to the struggling but still active Sallie Mae, is in better shape than Michigan and Massachusetts, where state-run student loan programs have been suspended.

“We’re hoping that students will be no more than inconvenienced, but that remains to be seen,” Handy says. “The next few weeks will tell us.”

For families concerned about covering expenses for the coming academic year, there are several avenues to ease the pain. For a start, most universities offer payment plans that defer the cost over time. At UIndy, for example, the annual cost can be spread over 10 monthly installments.

For those who need to borrow money, the options include:
Stafford loans
These low-interest, need-based loans are federally subsidized to defer payments and interest while the borrower remains an active student. Maximum loan amounts range from $3,500 for freshmen to $5,500 for juniors and seniors. Among various changes approved by Congress this year, students now can borrow an additional $2,000 without demonstrating need, but that portion is unsubsidized, so interest accrues while the borrower is still in school.
Parent loans
Parents of dependent students can apply through various lenders for federally guaranteed PLUS loans to cover the full cost of college attendance – including housing, books, computers and other related expenses – minus any financial aid received. The borrowers do not have to show need but must pass a credit check. If the parents are denied because of bad credit, the student is eligible for an additional $4,000 in unsubsidized money from the federal Stafford program.
Private loans
Private loans can fill the gap for families that can’t obtain enough money through other means. The interest rate typically will be higher, however, and interest accrues even though payment is deferred while the borrower remains an active student. Because the student is the borrower, a co-signer may be necessary.

More information on student loans and financial aid can be found at financialaid.uindy.edu.