Teresa McUsic

Legislators take aim at financial aid programs for college students

New college freshmen in Texas universities will likely not be seeing some popular forms of financial aid from the state in their packages this year.

The Top 10% Scholarship Program for those in the top 10 percent of their high school graduating classes has been cut in both the Senate and House versions of the state budget.

Likewise, the B-on-Time loan program, which offered zero-percent interest and loan waivers to those who graduated in a timely fashion with a “B” average, has been slated to be phased out with no new awards to entering freshmen.

In addition, the Hazlewood Legacy tuition waiver program for Texas veterans and their children has been severely curtailed with new restrictions placed by the state Senate earlier this month. The amendments were thrown out this week by the House, however, and the program outcome remains up in the air.

All three programs represent some of the few financial aid tools available to middle-class Texas families to pay for college.

There is some bright news for lower-income families, however. Two grant programs — the TEXAS grant and the Texas Opportunity Grant — have increases built into both House and Senate versions of the budget. But the increased funding is still not high enough to meet demand, said Garrett Groves, program director of the Center for Public Policy Priorities in Austin.

In a time of a projected budget surplus, Groves said it is short-sighted for state lawmakers to be discussing cutting or underfunding financial aid programs.

“We’re looking at around $1.1 billion in financial aid through the grant programs, but $5 billion in tax cuts,” he said. “We could double our investment in all the financial aid programs and still have a $3.8 billion tax cut.”

The outcomes of both grant programs will depend on a reconciled budget between the Senate and House now caught up in a tax-cut battle, said Groves.

“It’s not a high enough priority,” Groves said. “Everything is a distant second to the tax cuts.”

Ken Martin, chief financial officer of the Texas Higher Education Coordinating Board, which oversees most of the financial aid distributed by the state, said the board asked the Legislature to fully fund both the Top 10% Scholarship and B-on-Time loan programs.

The Top 10% scholarship was originally funded at $2,000 per grant when it started in 2009, with an additional $2,000 targeted for students in math and science.

The latter was never funded, however, and the scholarship has been reduced to $600 this school year as more students qualify, Martin said.

The B on Time loan program also was hindered because not many students knew they had to contact their school to get on the list for consideration, Martin said.

Overall, Martin said the board is optimistic that its largest financial aid program — the TEXAS grants — will see an increase in funding.

“We are very hopeful to see an increase in financial aid on an aggregate basis,” he said. “The House and Senate are appropriating more money than their current levels.”

Martin recommends students who need financial aid consider another program run by the state called the College Access Loan, which is funded by general obligation bonds instead of the state budget. This loan program also cannot be marketed through he schools, but students can apply at www.hhloans.com.

The CAL program recently reduced its interest rate from 5.25 percent to 4.5 percent, giving it the lowest interest rate for student loans in the country.

Teresa McUsic’s column appears Saturdays. TMcUsic@SavvyConsumer.net

Financial aid in Texas

Here is a breakdown of college financial aid programs in the Legislature:

The Top 10% Scholarship Program: Received this school year by 16,590 students. Senate and House each call for $21.4 million in cuts with money going only to those already in college. Program to end once those students graduate or are no longer eligible. No entering freshman will receive the scholarship.

TEXAS Grants program: Would see an increase of $83.5 million in the Senate and $27.7 million in the House. Currently, 75,913 students receive this grant.

Texas B-on-Time loan program: Slated to be phased out. This school year, there were 9,295 loans made to students under the program.

Texas Opportunity Grant Program: The House plans to add $41 million to the program, the Senate $27 million. Program designed for needs-based students in two-year colleges. This school year, 27,753 students were awarded this grant.

Hazlewood Legacy benefit: The Senate increased the time in active duty to qualify from 180 days to 6 years and changed program to expire 15 years after service. House removed those amendments this week. Program was expanded to include children of veterans in 2009. This school year, 36,724 students received award.

Sources: The Texas Tribune and the Texas Higher Education Coordinating Board