Today’s post is brought to you by guest blogger Meiling Hunter!

With widespread panic plaguing the financial markets, everyone is looking to predict the next victim of the credit crunch. Many foresee student loans as next up to the guillotine–preventing many college-bound students from fulfilling their dreams of higher education. I say it’s all a bunch of hooey.

Yes, there are some student loans that are affected by the credit crunch. They’re called private student loans, and they are high-cost private loans. But federally funded student loans are not going anywhere. In fact, Congress recently passed the College Cost Reduction and Access Act of 2007 that will reduce millions of students’ loan costs by cutting interest rates in half– 6.8 percent to 3.4 percent over the next four years.

The College Cost Reduction and Access Act will also boost the maximum Pell Grant award, increase loan forgiveness for those who work in public service, and decrease the financial aid penalty associated with student work and savings. As much as $46,000 of funding is available to some undergraduate borrowers irrespective of their family’s credit histories.

While Sallie Mae, the largest student loan provider in the country, and some other for-profit student loan lenders are tightening credit standards and discontinuing loans offers to students attending for-profit career schools and community colleges, it’s not a crisis. Only 1.4 percent of community college students take out private loans and the students that are going to lose access to the expensive for-profit private loans are borrowers with poor credit and academic histories.

These same borrowers, however, can often receive the same training at lower-cost community colleges. This is not to say that privately held loans are going away completely, because they’re not. It is just going to be a bit harder to get private student loans in terms of credit standards.