Promise of college aid turns empty

TEXAS grant program short; 22,880 qualify but won't get money

By: Jason Embry, Staff
Austin American-Statesman
November 26, 2004 Friday

Thousands of students who were expecting the state to pay for their college tuition could instead get stuck with the bill after graduation.

State lawmakers created the TEXAS Grant program in 1999 to pay tuition and fees for students who take challenging classes in high school and need help paying for college. But because of a funding shortage and steep tuition increases, the program ran out of money quickly this year, leaving more than 22,000 students looking for another way to finance their educations.

"I was promised something. And now it's nowhere to be found," said Stephanie Limon, who graduated from Austin's Akins High School in May and now works two jobs and relies on her parents' savings to pay her tuition and other expenses at Austin Community College.

State and college officials are now trying to shift many of those students to a new state-financed program called the B-On-Time loan program. The loans provide the same amount of money as the TEXAS Grant, but recipients have to repay the money unless they graduate with a B average and, in most cases, within four years.

Some students, though, won't even have that option because their colleges don't want anything to do with the program, state officials said.

The new emphasis on the loan program may reflect a shift in the state's philosophy for distributing college aid.

A panel of lawmakers and the state's Higher Education Coordinating Board have recommended in recent months that the state try to reduce the cost of the TEXAS Grant program by providing the grants for only the first two years the recipient is in school. The conditions of the B-On-Time loan would then kick in during the second two years, meaning the state would provide money for tuition and fees but with strings attached.

"By providing a grant and providing a loan, you send a signal to the student that the state's going to put a lot of money toward your education, and we're going to expect some level of performance in response," said Teri Flack, the coordinating board's deputy commissioner.

The board estimates that the state could save $1 billion over four years by combining the programs, because about three-quarters of loan recipients likely won't graduate on time with a B average and will have to pay the state back.

But state Sen. Rodney Ellis, D-Houston, who led the effort to create the TEXAS Grant, said lawmakers should give a grant to everyone who qualifies.

"It's all a matter of where your priorities are," Ellis said. "If we had as much of a commitment to getting young people a quality education as we had to bricks and mortar -- building Tier One campuses and highways and toll roads in Texas -- the program could be funded."

The shift to the loan program comes at a time when federal college aid programs may also be in trouble. Congress passed a spending bill last weekend that could cause nearly 100,000 students nationwide to lose federal Pell grants because of new rules on how a family's net income should be calculated. It is unclear what the impact will be in Texas.

Grant money dwindles

The Toward Excellence Access and Success Grant program provides money for college to students who graduated under the "recommended" or "distinguished achievement" high school plan, keep a 2.5 grade-point average in college and come from families that are unable to pay more than $4,000 a year for college.

There was enough money in the program a couple of years ago for everyone who qualified for the grants to receive them. But the number of first-time grant recipients has fallen, from 38,589 in the fall of 2002 to 15,274 this year, a 60 percent decrease. The coordinating board estimates that 22,880 students who qualify for the grant this year will not receive it.

The problems began in 2003 when lawmakers increased funding for the $295 million grant program by only about 10 percent, according to Legislative Budget Board figures. At the same time, they gave universities greater latitude to increase their tuition. And increase they did, as much as 25 percent in a year.

All the while, word spread through Texas that the state would pick up the tuition tab for students who took tough classes in high school.

"We've told kids that we'll give you money if you take a college-prep curriculum," said Larry Burt, head of financial aid at the University of Texas. "And now we don't have the money to honor that commitment."

UT, with tuition and mandatory fees this fall semester of about $2,867 for Texas residents taking 15 class hours, is one of the most expensive public schools in the state.

Requirements of the recommended graduation plan, which the state began requiring for this year's ninth-graders, include Algebra II, three years of science instead of two and two years of a foreign language. In 2000, 82,000 students in Texas graduated with at least the "recommended" plan. That number reached 151,000 by 2003.

Meanwhile, the grants have grown from $2,950 in fall 2002 to $3,590 to keep up with rising tuition. That increase, coupled with the growing demand, has meant fewer overall grants are available.

Loan money awaits

Although the TEXAS Grants have dried up, the state has $50 million to spend this year on the B-On-Time loans. The state found that money when it refinanced the bonds that had been sold to pay for other loan programs. But the state has doled out only about $8 million of it this fall.

Lois Hollis, assistant commissioner for student services at the coordinating board, said some schools are reluctant to offer the loan.

Community colleges sometimes are wary of loans because their students often fail to make payments, which can cause the schools to lose other government aid. Also, she said, some private schools in the state don't want to participate in the B-On-Time program because they are concerned that they would have to contribute money to the program in the future.

And, sometimes, students themselves are reluctant to take out the loans.

"What we really have talked about is making sure we do a good job of educating the students that it's OK to take a loan, especially it it's a zero-interest loan that could be forgiven," Hollis said. "Some of these kids come from backgrounds where they are very loan-averse."

UT officials think they can give B-On-Time loans to any student who qualified for a TEXAS Grant but did not receive one. ACC officials sent out more than 100 fliers this fall telling students they qualified for the TEXAS Grant but did not receive it. The flier told students they could seek B-On-Time loans, but only one student has taken that offer so far, Director of Student Financial Assistance Terry Bazan said. Limon, the ACC student who didn't get a TEXAS Grant, said she has received other aid, though not enough to cover her expenses.

Many students don't want to borrow money to pay the relatively low cost of community college, especially if there are conditions attached, Bazan said. Also, she said, it sometimes takes a couple of years for new aid programs to catch on.

"They could still get it if they want," she said. "We've got the funds."




Two options for Texas students

TEXAS Grants and B-On-Time loans are both available to students who graduated from a Texas high school under at least the 'recommended' courseload and to some students with degrees from two-year colleges. Both programs pay $3,590 a year for university students, $1,980 for technical schools and $1,270 for community colleges. But the requirements to receive the money and pay it back differ:

TEXAS Grants

  • Students' families must be able to contribute no more than $4,000 to their college education.
  • Students must carry a class load of at least nine hours.
  • Students do not repay the grants.

B-On-Time

  • Students must qualify for financial aid under federal guidelines.
  • Loans are forgiven for students who graduate with a 3.0 GPA in four years, or two years from a community college.
  • Students can take five years to finish some programs, such as architecture and engineering.
  • Loans that are not forgiven must be repaid at zero interest.