Big financial news today, and not about plunging markets. This headline from today’s NYTimes states it pretty cleanly: U.S. Unveils New Programs to Ease Credit.

“It was the first time that the Fed and the Treasury have stepped into finance consumer debt, from car loans and student loans to small business loans. The $200 billion program comes close to being a government bank, highlighting the extent to which Washington has been obliged to step in for the paralyzed banking system.”

The credit squeeze has affected college students and their families by making financial aid harder to obtain. As lenders have tightened their credit standards, there already has been a significant shift toward the PLUS loan program, which allows parents to take out loans for their children, and not only allows for loans up to the full cost of college, but also is federally guaranteed (which, at this juncture, is recommended HIGHLY). But the reach of the PLUS loan program is limited; not every student in need has a family situation allowing for a PLUS loan, and not every family has eligibility, which is determined in part by credit rating.

The Times article continues, “But the programs also represented a new level of commitment by the Federal Reserve. Instead of trying to strengthen the economy by reducing short-term rates, which is the usual policy tool, the Fed is pumping vast amounts of money directly into specific markets for mortgages — and anything else that it believes needs help.”

At his press conference from Chicago yesterday, President-Elect Obama emphasized that the size of the overall aid package (financial aid included) needs to be sufficiently large right out of the gate. “We have to make sure,” he said, “that the stimulus is significant enough that it really gives a jolt to the economy.”

Get up to speed with the latest in college aid at our Financial Aid Center.