You can always tell how a state’s doing financially by looking at the tuition rates at the state run colleges and universities.  With local and state governments having difficulties financing their debt because of recent disruptions in the municipal bond market, a number of states have already started raising tuition fees.

Many families will also find it difficult to finance their child’s higher education with a home equity loan or mortgage.  Much of the wealth built up by the middle class has been lost, as home prices have plummeted in the worst housing slump in generations.

Some institutions have increased the number of grants they offer to help incoming students compensate.  It becomes essential for your child to apply for any and all grants and scholarships for which they might qualify.

Lawmakers are also trying to increase the limit on federal student loans which is capped at $3,500 for first year students.  With tuition costs rapidly outpacing inflation, this limit has been outdated for years.

This can be a drawback for families with low incomes that receive a high amount of financial aid, colleges and universities tend to offer aid packages up to the federal loan limit.  So, if the limit rises, the amount of aid you receive will more than likely fall.

On top of all that many lending institutions have stopped offering student loans all together.  While the Fed has been slashing interest rates since last fall it has had little effect on the rates of student loans which remain relatively high.  Coupled with much tighter lending standards, finding any kind of financing may become a daunting task.