Counselors Network


Texas Loan Programs Can Help Students Fill the Funding Gap

It’s summertime in Texas, and for students that means sleeping late, lounging by the pool, enjoying backyard barbecues, and generally taking it easy. Or maybe it means the opposite: a summer job that provides work experience and money to spend (and hopefully save) in return for sacrificed leisure time.

Whatever the summer holds, chances are that financial aid applications are not yet high on the average student’s list of things to think about. As you know, however, it’s never too early for students to start planning how they’ll pay for college. Smart planning involves considering all of a student’s options, including state loans.

Texas student loan programs
Texas students should know that the state offers two student loan programs — the Texas B-On-Time Loan Program and the Texas College Access Loan Program. Both offer favorable terms and benefits, and have the potential to help students fill the gap between their initial financial aid package and the cost of attendance (COA).

The Texas B-On-Time Loan Program
As you know, the Texas B-On-Time (BOT) Loan Program provides zero-interest loans to Texas undergraduate students. Since the program is designed to encourage Texas students to complete college in a timely manner while meeting high standards, the loan can be converted to a grant (that is, forgiven) for students who meet certain requirements.

Specifically, for loan forgiveness, 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 (two calendar years for programs at public or private 2-year institutions, four calendar years for most bachelor’s degree programs, and 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.

Either way, this program is a good deal for Texas students. If a student qualifies for forgiveness, great — he or she won’t have to pay back the BOT loan, and may get to start working and earning a paycheck earlier. If the student doesn’t qualify, he or she has still financed part of a college education with a zero-interest loan, and you literally can’t get a better interest rate than that.

The Texas Higher Education Coordinating Board (THECB) has announced that information on B-On-Time (BOT) funding allocations for fiscal year 2013 is now available on This year’s allocations are sufficient to fund renewal students, along with a small amount for new loan awards. The annual loan amounts for 2012–2013 are:

  • 4-year public and private institutions: $3,700/semester ($7,400/year)
  • 2-year public and private junior colleges: $1,200/semester ($2,400/year)
  • Public technical colleges: $2,200/semester ($4,400/year)

Borrowers should be aware that a 3% origination fee will be deducted from the loan proceeds—meaning that the actual loan amount they receive will be 3% less than the amount they are awarded by the school.

The Texas College Access Loan Program
Many Texas students may also benefit from the Texas College Access Loan (CAL) Program. The CAL is designed to help families make up part or all of the difference between the student’s expected family contribution (EFC) and the school’s cost of attendance. While families do not have to demonstrate financial need, students should be aware that either the borrower or a loan cosigner must demonstrate a good credit record.

Students who qualify for the CAL can enjoy benefits they might not receive from privately issued loans, such as a fixed interest rate of 5.25 percent, no interest capitalization, a six-month grace period after the borrower leaves school, and several repayment plan options.

To learn more

For more information about both loan programs, please see the State Loans (Texas) page on TG Online. You may also direct students to the Texas Financial Aid Information Center for more information. The Texas Financial Aid Information Center (TFAIC), a free public service call center available to all Texas students and families wanting to pursue a higher education. The TFAIC’s toll-free number is (888) 311-8881. Students can also contact TFAIC via email at TFAIC representatives are available Monday through Thursday from 8:00 a.m. to 6 p.m., and Fridays from 8:00 a.m. to 5:00 p.m., Central Time.