Federal laws that restrict what loans advisers are allowed to mention to students mean that students are not provided with information that could save them money, according to Tom Melecki, director of Student Financial Services.
Federal law currently prevents institutions from recommending, promoting or endorsing private student loans, which are defined broadly enough to include loans offered by the state of Texas. One state loan program, the B-On-Time program, offers a no-interest loan that is fully forgiven if the student graduates on time for their degree with a GPA of at least 3.0. According to Melecki, advisers are not allowed to recommend this loan to students unless they specifically ask to be put on the waiting list.
Melecki said the restrictions on what information an adviser can share means many students never find out about options like the B-On-Time loan. According to Melecki, $32 billion in B-On-Time money went unused in Texas in 2012, though more of the money was accessed in 2013.
“The B-On-Time loan can support students in achieving on time graduation because if we can provide them with B-On-Time money, they wouldn’t necessarily have to go out and work and earn money [during college],” Melecki said, “They’d have more time to work on their studies.”
According to Karen McCarthy, senior policy analyst at the National Association of Student Financial Aid Administrators, one option provided to the University is to advertise a list of approved, independent lenders to students, with the hopes that those lenders recommend alternative loans. McCarthy said most universities choose not to use this option because they cannot guarantee the trustworthiness of the independent lenders.
“[Universities] are kind of stuck between a rock and a hard place,” McCarthy said.
Melecki said independent lenders can be a risky option.
“Oftentimes, those loans turn out to be more expensive for students and certainly federal student loans,” Melecki said. “We don’t particularly want to be in a position of recommending to our students loans that may not be as good for them as the federal loans that are available to them.”
When the Higher Education Act preventing the information sharing was implemented in 2012, the state allocated the University more than $6 million in B-On-Time funds, but students only used 59 percent of the allocation. In 2013, more students accessed the loan and used 99 percent of the state allocation. Melecki said he was not sure how students became more educated about the loan but said he appreciated the increased interest.
“What we want to do is be in a position where we can utilize this to the maximum extent every year,” Melecki said. “This is a fabulous loan program for students.”
A bill to amend the Higher Education Act is currently being reviewed by the House Committee on Education and the Workforce. Eight UT Student Government members are working to create an awareness campaign to lobby in support of the bill, H.R. 3371.
Philip Wiseman, government senior outgoing chief justice for the SG Judicial Court, said he has not heard any opposition to the bill from state representatives with whom SG has discussed the loan.
While the bill is in committee, Wiseman said he plans to inform students about the B-On-Time loan through postcards to families, social media and campus-wide emails.
“In the mean time, while the University is handicapped, we are going to serve as the liaison to the student body,” Wiseman said.