About 700 incoming UT freshmen will be denied up to $5,170 a year from the Texas B-On-Time Loan program for which they were already approved. An $8 million budget cut to the statewide program leaves universities scrambling to fulfill the requests of others applying for a renewal of the loan.
The Texas B-On-Time Loan program provides an interest-free loan that does not need to be paid back if the student graduates with a cumulative grant point average of 3.0, within six hours of the student's degree plan and within four years or five years for engineering and Architecture majors.
Funding for the program, which started in 2004, has been cut to $41 million from the $49 million that was allotted during the 2006-2007 school year, said Dominic Chavez, assistant director of state governmental relations at the Texas Higher Education Coordinating Board.
The board projects its budget will be enough to cover all but 659 renewal requests from students across the state. The coordinating board is attempting to move $2.5 million from the 2009 fiscal year's budget to extend the coverage to all 9,900 existing renewal applicants.
The amount of money allocated to each student, $5,170 a year, will not change. No new students will be admitted into the program for the next two school years, Chavez said.
Each participating university's student financial aid office will notify students of their status within the program. The Office of Student Financial Services at UT has identified the freshmen and is working to replace the money, said UT financial aid officer Christine Gauger.
More students could possibly be affected. Gauger added that because the University has not received its allocation from the coordinating board, it is not sure if any of the renewal requests will be denied.
"What we are doing is looking at each one individually and trying to figure out the best that we can offer the student," Gauger said.
The Office of Student Financial Services provides no other loan forgiveness programs for the 20,000 UT students on financial aid. Gauger said that some cases will simply be switching to Stafford or Perkins loans, which have interest rates of 5 percent.
The shortfall cannot be entirely attributed to the state government, as the Texas Legislative Budget Board has actually given more than ever to the program. They did so to make up for the lack of funds available to the coordinating board for the next two years, Chavez said.
In the last two years, the coordinating board refinanced bonds, resulting in a one-time addition of $40 million to the program's budget. Other funding is provided by participating universities, which, in exchange, receive an allocation of loan money for their students.
Even with that increased funding, the amount of money available from the schools and from the state is still only enough to cover the existing renewals, Chavez said.
"We are always looking for ways to get new students into the program, but priority number one is to get this renewal situation under control," he said.
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