COLUMBUS — More than 50 lenders have fled the federal government's student loan program, but educational groups and schools are telling parents not to panic.

The Education Department said in March the credit crunch should not affect its Family Federal Education Loan program because there are more than 2,000 lenders that originate loans for it.

But students considering private loans — consumer loans with interest rates that can exceed 20 percent — could feel pinched. Private education lenders have instituted stricter credit requirements to qualify and have stopped working with trade schools with low graduation rates.

In 2004-05 lenders provided about $14 billion in private loans, a 734 percent increase from a decade earlier, according to the College Board.

In addition, a panel of students and financial aid experts told Sen. Sherrod Brown, D-Ohio, on Monday, April 21, that more disclosure about private loans is needed.

The students and financial aid experts spoke during a hearing of the Senate Health, Education, Labor and Pensions committee at Ohio State University.

The panel asked Brown to push for legislation that would require stricter disclosures by private colleges and for-profit trade schools on the financial aid packages they offer to students, which often include private loans with high interest rates that are often misleadingly branded with the school's name.

Schools should be required to clearly disclose the interest rate on such loans "and they don't have adequate safeguards for students," said Barmak Nassirian, associate executive director at the American Association of Collegiate Registrars and Admissions Officers.

Brown said he has introduced legislation that would create a federally backed alternative to private loans.

"I am concerned that not enough attention has been paid to the increasing prevalence of these loans and their impact on students and families. They're not always operating in the best interest of students," Brown said.

Student loan advice for fall

Look first for loans through the federal government. You'll borrow either through the Federal Direct Loan program (borrowing from the fed directly) or through the Family Federal Education Loan system (government-backed, subsidized and unsubsidized federal loans through private banks). Some lenders in the second program have stopped making loans because of the credit crunch. This means fewer lender choices, but you will be able to get a federal loan.

For parents considering borrowing fixed-rate PLUS loans, know that you can be denied for bad credit. Given the economy, more parents are likely to be turned down. If so, your child becomes eligible to borrow $4,000 or $5,000 more per year through the unsubsidized Stafford program than the typical $3,500 cap.

If considering private loans, you'll need higher credit scores than before and must not attend a school with a low graduation rate. Interests rates are higher this year, more than 20 percent. Student advocacy groups suggest avoiding expensive, for-profit schools and opting for a lower-cost community college.