College costs rise dramatically in 2008
Current and prospective college students got a double dose of bad news last year: costs rose sharply while college lending dried up.
The independent College Board reported that costs jumped by an average of 6.4 percent in the fall of 2008, even as the general rate of inflation plummeted.
The average list price of tuition and fees at four-year public universities rose to $6,585 per year, while the cost of the average private college increased to $25,143, the Board said.
Easing the sting
The good news was that the average 
student does not pay full price, the Board says.
They reported that on average, students get $3,700 in grants and tax benefits toward public schools and $10,200 for private schools.
Also, more than half of all students attend schools that cost $9,000 a year or less. Only a small minority go to the top colleges that now cost $50,000 a year or more.
The best deals remain at public two-year colleges, which cost an average of $2,402 a year and whose costs increased by just 4.7 percent last year, the College Board said.
Lending declines
After years of large increases in private sector lending to college students and their families, private credit became scarce last year. That caused a scramble for federal student loans, which increased by 6 percent over 2007, the College Board reported.
Banks and other private lenders were already cutting back on college lending early in the year as the profitability of such loans declined. Then they were hit by a full-blown credit crisis in the fall and some stopped making loans.
Although most students were still able to get loans for the current school year, an increase in private lender fees and interest rates have raised the costs for many.
To add insult to injury, about two-thirds of college graduates leave school with student debt. The average debt load at graduation was $22,700, the College Board said. Until now rising incomes and the availability of jobs helped to ease the debt burden.
However, in the midst of the current recession jobs are disappearing and graduates are finding it harder to begin careers that pay enough to help them make their loan payments.