Students could face big problem come fall as many lenders are predicting that college loan rates will increase while loans themselves will be much harder to come by thanks to difficulties in the credit market. The subprime mortgage crisis has driven investors away from asset-backed securities that are a critical source of capital for many student lenders. And recently, the market for auction-rate securities, an investment vehicle tied to student loans, has frozen almost completely. It'll be interesting to see how this plays out...

From the Wall Street Journal:
Amid a widespread tightening of credit, some student lenders predict college loans will be harder and more expensive to come by for the fall. Without a break in the credit crunch -- such as stepped-up lending by major banks -- the situation could become far worse, these lenders say, leading to many students being unable to fund their educations. "There is no question in my mind that, unless something changes in the marketplace, there will be a shortfall of funds available to make student loans," says Mark Valenti, president of the Connecticut Student Loan Foundation, a nonprofit lender based in Rock Hill, Conn. "I've been doing this since 1978, and I've never been more nervous."