Paying For Second Semester Could Be Tough For College Students

Paying for second semester could be tough for college students. Overall, it seems most students made it through the first semester, even though loans were harder to find and many loan disbursements were delayed or cancelled.

Students might not be so lucky next semester.

Since August, the credit crisis has grown much worse and so has the economic situation for families across the country. Many families will enter second semester with exhausted savings accounts, extremely limited access to home equity lines of credit and severely depleted retirement accounts – not to mention those parents that have recently lost employment.

Although students shouldn't have problems accessing their federal student loan dollars, some parents who have gone through recent economic problems may not qualify for Parent PLUS Loans (there is credit criteria related to bankruptcy, delinquencies and defaults on other federal student loan debts). Recent mortgage delinquencies or bankruptcy will prevent some parents from accessing parent loans under the current PLUS criteria.

If you were previously using private student loans to fill the gap that free money and federal loans won't cover, expect it to be much more difficult to secure that money next semester. Even parents in good financial standing will find it much more difficult to co-sign for a private student loan now, given that lenders are scarce and credit criteria has grown increasingly strict. Just another reason why it's important to plan for second semester costs early this year. Here is a short list of second semester financing tips:

1. Maximize all of your federal loan options
Make sure you understand federal student loan options and borrowing limits for undergraduates, graduates and parents.
2. Start looking for a lender now
Whether you're taking out federal loans, private loans or both to cover your second semester costs, complete the application process as early as possible this year.
3. Utilize work study money
If you were granted federal work study money, be sure to check with your school for open positions. The jobs are usually on or near campus and they are designed to work around your school schedule. If you don't qualify for federal work study, but still need a small income, consider short-term holiday employment or a flexible part-time job.
4. Talk to your school
Ask your school's financial aid office about all of your financial aid options, including payment plans, scholarships only available through the school, etc. As a reminder, many financial aid offices are closed over the holidays so contact them immediately.

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