Until recently, students could obtain private loans with good credit, he said. But now, those who don't have cosigners may not be able to get those loans.
Last year's surge in student debt coincides with rising education costs, which continued to rise this year. The nonprofit College Board, which operates assessment tests, said tuition and fees rose 6.4% at public universities in the 2007-08 school year compared with the previous school year. Room and board were up 5.2%.
Robert Shireman, executive director of the Project on Student Debt, noted that the seniors in the study graduated before the financial downturn, but the economy's tailspin this year "makes high student loan payments even harder to bear."
Students unable to get private loans may turn to government-backed Stafford loans, which generally have lower interest rates than private loans but usually are for smaller amounts.
Unsubsidized Stafford loans don't require students to demonstrate financial need, but the fixed interest rate of 6.8% accrues from the date of the loan.
The rate for subsidized Stafford loans dropped in July from 6.8% to 6% and is scheduled to drop the next three years until it reaches 3.4%. Unlike with unsubsidized loans, the government pays the interest while the student is in school.
Despite a tightening credit market, "the bottom line is that federal loans are still available in spite of what people might think in the credit crisis," Reed said. "Everyone can still get a federal student loan."
--
catherine.ho@latimes.com
