Take control of student loans by Travis Knoll Daily Texan columnist original rundate Oct. 1, 2012

Travis Knoll

Editor's Note: This article was originally published on October 1, 2012, but it was updated to include corrections on October 2, 2012.

A recent headline in May from the New York Times sums up what students are hearing these days, “A Generation Hobbled by the Soaring Cost of College.”  The article goes on to paint a dismal portrait. The daughter of a paramedic and a preschool teacher wishes to pursue her dreams, goes to a small liberal arts college charging $50,000 a year, and ends up paying $900 dollars a month. College, while a safe bet, is not as safe as it used to be, with the average amount borrowing debt in 2011 is $23,300 according to the article citing the New York Federal Reserve. Is the situation at UT similar to the national case?  What can we do?

Comparing ourselves to the national statistics also presents a mixed picture. Many students I talk to on campus seem disengaged with the loan process. Some don’t borrow, others don’t pay attention, or others borrow because they have few other options. Part of this lack of engagement with the issue locally comes from lower borrowing rates at UT compared to the national average. According to Dr. Tom Melecki, head of UT Financial Aid Services only about 50 percent of UT students even borrow while studying for their undergraduate degree, well below the national average of two thirds. According to a study prepared by Dr. Melecki, drawing from the Office of Student Financial Services database, 2,489 UT students graduated in May 2011 with an average of $24,582 of debt. Of the total amount borrowed by graduating seniors in the last academic year, 44 percent consisted of the Federal Direct Subsidized Loans, with an interest of 3.4 percent accruing six months after graduation, 37 percent consisted of Federal Direct Unsubsidized loans, which start to accrue immediately after borrowing, 7 percent consisted of the State College Access Loans which accrue at 5.25 percent interest, but with no compounding interest, 4 percent consisted of the Federal Perkins Loan, which can be forgiven for service in low income schools, and 4 percent consisted of the relatively unpublicized State B-on Time Loan, which collects no interest and is forgiven if a student in a 120 hour program, graduates on time. These numbers do not, however, include December graduates. 

Directly from the Project website, we get more comparative numbers that indicates those who borrow at UT borrow around, if not a little more, than the state and national averages.In 2009-2010 the average debt was $24,667 for UT compared to $20,919 statewide with 25 percent of UT students on Pell Grants. According to the report “Student Debt and the Class of 2010,” Texas overall ranks in the middle, neither with student debt on the level of New Hampshire and Maine with around $30,000 dollars of debt as of 2010, nor as little as Hawaii or Utah with $15,500.

What conclusions should we draw from these numbers?  For the quality of its programs, UT is fairly affordable, but we could lose those advantages. Our endowment, second in the nation, is divided among 50,000 students and various departments and research initiatives. And while only 17 percent of our funding comes from the state coffers, the legislature has significant sway over what type of loans and grants are available to students. According to Melecki  there are discussions about eliminating or reducing the TEXAS Grant and Top 10% Scholarships. One of the recommendations from the Texas Higher Education Board on September 12th to the Senate Committee on Higher Education was to substitute the B-On Time Loan with a loan that would accrue up to 6.8% in interest. Dr. Melecki claims that Financial Aid wishes to avoid the dilemma of “between taking on crushing debt burdens or not attending UT,” but Financial Aid’s remedies aren’t sufficient for addressing drastic rises in cost.  As students, we need to realize that the ‘it could be worse’ and ‘it will get worse’ unless we become actively involved in tracking our state finances. The danger of pricing out lower income students is real but not unavoidable. I don’t have the solutions, but recognizing that there is a problem is the first step in searching for long-term solutions.


The source for Melecki’s report was the Office of Student Financial Services Database not The Project on Student Debt.

The percentages attributed to each loan did not represent ‘the total number of students borrowing’ but rather ‘the total amount borrowed’ by last year’s graduating seniors.

The average debt for the University of Texas as of 2010 according to The Project on Student Debt was not $22,874, but rather $24,667.