As home owners and investors continue to wrestle with the effects of the credit crisis, there’s a more fresh-faced batch of victims to add to the battle: College students.

The impact of the nation’s economic downturn is being felt at state lending agencies where students are being left without loans now just days before the start of the school. Parents and students are beginning to fret about covering tuition costs for the year. But, before you reach panic mode, there’s some good news. Despite cutbacks from private loan agencies, there is still money available to help finance your education.

 You just have to know where to start to look.

“We always encourage students to go federal aid first,” says Jane Glickman a spokesperson at the U.S. Department of Education. Since federal loans are guaranteed, for eligibility, students must fill out a Free Application for Federal Student Aid online or at their university. Then you should exhaust your federal loan options, which includes Perkins, Stafford or Plus Loans, says Mark Kantrowitz founder of FinAid.org, an online guide to student financial aid.

Federal loans are oft-times less costly than student loans obtained from private lenders, will save you money in the future and they’re easier to obtain. How so? A Stafford loan, which is insured by the Department of Education, is a student loan that is not based on a student's credit history. It’s based on student need.

Next, look at private loans, which may be a bit more challenging. In July, the Massachusetts Educational  Financing Authority called a halt to private student loans. And, it’s not just Massachusetts, agencies in Kentucky, Michigan, Montana and New Hampshire, among others, have stopped offering private and sometimes federal loans for the upcoming school year.

“It’s been our experience that where some lenders have stepped out of doing federal loans, others have stepped in,” says Glickman. 
Your university may be able to recommend a loan agency that is providing the best student loan rates. Better yet, find out if your college or university has a direct lending program. If you’re unsure about what your college may have to offer, call the financial aid office immediately. You don’t have to wait to stand in line to find out –your school's contact information should be available on its Web site.
One caution: Don’t get too comfortable with the money your loans provide. In today’s climate, make minimizing debt a priority. “Live like a student while you’re in school,” says Kantrowitz. The urge to borrow obscene amounts of money is always there –particularly if you’re living like a pauper. However, don’t spend what you want, instead spend what you need. Another good tip according to Kantrowitz?  Do not “borrow more than your expected starting salary."