DALLAS — Just weeks before starting a new academic year, thousands of college students throughout Texas are being told they won't get the interest-free, forgivable loan they were counting on to pay tuition.
The Texas Higher Education Coordinating Board notified college financial aid offices this month that there isn't enough money in the Texas "B On Time" loan program to cover all the students who qualify.
The program awards students interest-free loans that are totally forgiven if they graduate on time with at least a B average. But, with $8 million less in the program than last year, state officials told college financial aid offices that there is no loan money available for new students.
About 650 students who obtained the loan last year also won't be able to renew, though which returning students will lose out hasn't been determined.
"If you're not going to do the program, then at least give notice far enough in advance so that you're not counting on that money," said DeSoto parent Emily Barmer, whose son, Brad, won't be getting the loan.
Last year, Texas spent $49 million on "B On Time" loans, enough for 12,800 students. But there's only an estimated $41 million available for the loans this academic year, enough for 9,900 students.
Texas' two largest campuses, the University of Texas at Austin and Texas A&M University, have started notifying incoming freshmen who won't get the loans as expected. Some 700 incoming UT freshmen won't receive the "B On Time" loan.
Campus financial aid officials say they are trying to offer students other types of loans. But those loans can charge 6 percent or 8 percent interest and don't offer forgiveness for good grades and timely graduation.
Those offers have become even more important in recent years, when tuition at public, four-year colleges has risen about 40 percent on average. Tuition, room, board and expenses is expected to top $20,000 this year at UT's flagship campus.
Some Texas colleges didn't tell incoming freshmen about the "B On Time" loans, because officials weren't sure the money would come through.
"Our financial aid office did not have confidence that there would be enough funding to take care of new freshmen, because funding can be quite variable," said Susan Rogers, a spokeswoman at the University of Texas at Dallas. "You just don't want to disappoint students."
About 400 incoming freshmen were eligible for the loans at UT-Dallas, but the school did not mention them in award letters sent to students in the spring. The University of Texas at Arlington had students sign a waiting list in case the money became available, rather than telling them they had the loan. More than 500 were on the list.
