I remember complaining because I had student loans. But, I kept telling myself that it went towards a good cause. However, had I not gotten loans, I might not have been able to finish college.

Today, I read something that showed me how close to home this credit crunch is going to hit Americans.

It appears that some banks are now no longer offering student loans.

In the past fortnight, some banks, including HSBC, have pulled out of the $85 billion (£42 billion) a year US student loans market, fuelling anxiety that the turmoil that hit debt markets on Wall Street last summer is spilling over into the wider economy and making credit more difficult to secure for ordinary American households.

In the US, many undergraduates take out a federal guaranteed loan and top up their financial needs with a private loan from lenders such as Bank of America, JPMorgan Chase and Citi-group. In the academic year 2005-06, $17 billion in private student loans was used to finance higher education.

Banks have become reluctant to offer private student loans because worsening credit conditions have meant that they cannot package up the loans and sell them on.

Although the brightest students who win places at America’s rich Ivy League universities will be affected less because of generous bursaries - which do not have to be repaid – less able students applying to other institutions are expected to face difficulty in securing private loans to fund their study. At one end of the field is Harvard University, with $34 billion of endowments, and at the other are many community colleges and low-tier universities with limited resources.

So, unless you kid’s in an Ivy League school, chance are that securing a loan is going to be a problem. Mark my words: this will be the next cause for a major credit crisis. When scarcity becomes an issue, you’ll see the vultures swoop in, offering student loans at bad rates. When things subside in the housing market, these bad loans will be sold to them and default rates will skyrocket.

Why do I think this? It is because the current presidential administration’s answer is to bail out big business and leave the little guys to fend for themselves, which leaves them vulnerable to unscrupulous practices. So, I will not be surprised when the issue arises again, in a different form.

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