In an effort to head off a potential crisis in the availability of student loans, a new law is designed so that students and families continue to have access to funds available through federally backed student loan programs.

The Ensuring Continued Access to Student Loans Act of 2008, which President Bush signed into law May 7, allows the federal government to buy loans from lenders and bolster a program that helps low-income students finance college.

"We want students to be able to concentrate on their studies rather than worry about disruptions in the student loan market and whether they will be able to obtain federal loans to help pay for school," said Secretary of Education Margaret Spellings as quoted by The Los Angeles Times.

But a recent New York Times editorial pointed out that the federal government offers loans both privately, through lenders earning subsidies to participate, and publicly, through a direct-lending program.

"These programs are not equal," the Times editorial stated. "The credit crunch, which has caused banks to tighten lending standards, is new evidence that the direct-lending program is far preferable to its private counterpart."

In the past three months, it has been reported that approximately 80 percent of lenders have pulled out of the market for student loans. Some of the nation's largest banks have turned away students looking for community college loans, which are less profitable than loans for four-year colleges. Other lenders are starting to take in the community college business but the Times said college administrators fear the problem may cause some students to drop out before securing new loans.

Washington Post personal finance columnist Jane Bryant Quinn said students at some for-profit career schools and community colleges are at risk because their loans are less profitable. She singled out several groups for difficulties in the current college loan market including independent students with modest credit histories and no co-signor, parents with foreclosures or bankruptcy histories, students with low credit scores, and new borrowers. Her advice was to call the aid office at the college to help you.

"About 1,900 lenders remain in the market, a few big but most of them small. College financial aid officers will expand the list of banks and other sources they work with," Quinn said.