The state of Texas offers two student loan programs to assist students in paying for college expenses, but only one is available to new loan applicants.
The Texas College Access Loan Program
When a student applies for financial aid using the Free Application for Federal Student Aid (FAFSA), the US Department of Education estimates how much the student and his or her family can afford to spend for the upcoming year of education. The student’s school then subtracts this expected family contribution (EFC) from the school’s cost of attendance (COA). This difference is the student’s financial need.
The school may try to meet that need by awarding grants, scholarships, college work study, and/or federal student loans. For many students, however, the amount of aid awarded by the school isn’t enough to enable them to pay all the costs of their education.
The Texas College Access Loan (CAL) Program is designed to help with this situation. Families may use CAL to make up part or all of the gap between their cost and other available aid. Families don’t have to demonstrate financial need to take advantage of CAL, but the student borrower or a loan co-signer does need to demonstrate a good credit record to be eligible for a loan.
Students who qualify for CAL can enjoy benefits they might not receive from privately issued loans, such as a fixed interest rate of 4.5 percent, a six-month grace period after the borrower leaves school, no interest capitalization, and several repayment plan options.
Visit the program’s website for information on student eligibility, loan fees and interest rates, repayment information, and a link to a loan application page.
The Texas B-On-Time Loan Program
The Texas B-On-Time (BOT) Loan Program provides zero-interest loans to Texas undergraduate students who attend four-year colleges. Beginning with the 2015-2016 academic year, however, only renewal awards are available.
The BOT program is designed to encourage Texas students to complete college in a timely manner while meeting high standards. BOT loans can be forgiven for students who meet certain requirements. Specifically, students must graduate with a 3.0 grade point average (on a 4.0 point scale) and must:
- Finish within a specified length of time after they enter school (four calendar years for most bachelor’s degree programs or five calendar years for programs that require a longer period of study), or
- Finish with no more than six credit hours beyond what is required to complete their degree or certificate.
This program is a good deal for Texas students. If a student qualifies for forgiveness, he or she won’t have to pay back the BOT loan, but even if a student doesn’t qualify for forgiveness, he or she will still have financed part of a college education with a zero-interest loan.
The BOT program is dependent on funding from the Texas Legislature and may be funded at a level that doesn’t meet the full demand for loans. Availability of funds at any particular school is based on whether the school is participating in the program and the amount of appropriations the school has received.
Visit the program’s website for information on renewal eligibility and forgiveness requirements.