Report critiques B-On-Time loan, offers recommendations for promotion

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The Texas B-On-Time Loan program is facing criticism and recommendations for possible changes that could make it more widely available depending on the program’s funding.

The Sunset Advisory Commission’s review, released in March, critiqued the Texas Higher Education Coordinating Board‘s work during the 2011-12 academic school year. It included a critique of the state’s B-On-Time loan recommendations to lengthen the amount of time students have to complete college to get the loan forgiven, to increase promotion of the loan and to set requirements for credit scores.

In fiscal year 2010, the University did not administer $1,255,154 of the total $6,653,341 allocated to the University for B-On-Time loans. Student Financial Services director Tom Melecki said the total allocation has dropped to $2,675,135 for next year.

“We’re going to have to wait and see if we’re going to have any B-On-Time loans for new borrowers,” Melecki said.

The recommendation to set credit score requirements could pose a problem for some students, Melecki said, but getting a co-signer would be one solution.

In order for the loan to be forgiven, in-state students must graduate with a 3.0 GPA in four years or with no more than six hours of course credit beyond degree requirements. If students do not meet the requirements, then the loan must be paid back with a zero percent interest rate.

“This is a wonderful loan program,” Melecki said. “I’ve never seen a loan program like this.”

Melecki said it is difficult to communicate the advantages of the B-On-Time Loan to students because federal regulations limit a university’s ability to promote loans other than federal loans.

“It comes from a concern the federal government has for higher education steering students towards certain lenders,” Melecki said. “I’d love to be able to promote this loan to the student body, but our hands are kind of tied.”

That leaves promotion of the loan to the THECB, which has promoted the B-On-Time Loan as a grant program. One Sunset review recommendation is to increase promotion of the loan program while clarifying that students must meet certain provisions to have their loans forgiven.

“We haven’t developed a strategy for promoting awareness about the program,” said Linda Battles, associate commissioner of the THECB.

Battles said THECB disagrees with the recommendation to extend the time-to-degree and credit hour requirements that may hinder some students from receiving the B-On-Time refund.

“By lengthening the requirements, you’re essentially going against the original purpose,” Battles said.

The state budget cuts made from the last legislative session made funds for the program tight, according to a THECB letter sent to financial aid directors last Wednesday.

Business sophomore Omar Cisneros receives the B-On-Time Loan and said there are pros and cons to the recommendations. He said it pushes him to graduate in four years, but it could also restrict students who want to change their major. Cisneros heard about the B-On-Time Loan through a high school counselor and said it is helpful because he does not qualify for much need-based financial aid.

“I think it’s very beneficial,” Cisneros said. “I don’t have to take as many other loans out.”