Applications for federal financial aid are up 40 percent over last year in California and 20 percent at City College, but officials here say there’s no reason to panic.

“All financial aid programs are being funded through this year without disruption,” promised Brad Hardison, direct of financial aid at City College.

Across town, the Scholarship Foundation of Santa Barbara has noticed a big increase in applicants- and even bigger decreases in donor funding.

“This is one of the most challenging years for students to get financial aid,” said Colette Hadley, executive director of the Scholarship Foundation of Santa Barbara.

Hadley said that 2009, so far, is the worst year she has seen in the 16 years she has been with the foundation. Applications are up 15 percent so far, with some 3,000 students asking for help. This follows an 8-percent increase last year.

“We will give less money this year,” Hadley said.

Last year, the Scholarship Foundation gave $8 million in aid, including an estimated $500,000 to City College students. Hadley predicts this year’s funding will be around $6 million.

“Locally, people are dealing with tremendous investment losses, affecting local donors,” she said.

The foundation offers scholarships, loans and grants to college students who graduated from a public or private high school in Santa Barbara County.

There’s a bit more optimism at City College, which gets most of its financial aid money from the federal government.

Director Hardison said he believes that budget shortfalls and credit crunches won’t prevent funding that’s already been set aside for financial aid by state and federal governments.

He also maintains that a substantial rise in applicants for federal aid won’t be a problem. While state analysts expect a 40 percent rise in applicants filling out the Free Application for Federal Student Aid, or FAFSA, Hardison predicts the bump to stay at around 20 percent for City College.

Last year, 7,420 students applied for financial aid at City College. For the 2009-2010 academic year, Hardison said that 8,915 students have applied since Jan. 1. The deadline for submitting applications isn’t until June 30.

Hardison said that any proposed changes to the Cal Grant program are also unlikely to hurt a large number of students because few at City College apply and fewer qualify.

He says that while students aren’t stressing over a cut in aid, more are stopping by the financial aid office for information.