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University of Texas at Austin Forgives Students' Loans to Increase Graduation Rates
By Catherine Groux
Posted October 09, 2012 10:00 AM
A new pilot program at the University of Texas strives to increase its graduation rate.In an effort to increase its four-year graduation rate of 53%, the University of Texas at Austin is piloting a program that will forgive students' most expensive loans if they diligently work toward their bachelor's degrees.
According to a press release, in the fall of 2013, the university will select 200 freshman who have Federal Direct Unsubsidized Loans due to financial need. These loans have an interest rate of 6.8%, and interest begins to accrue from the time students receive the funds. Under the program, half of these 200 individuals will see $1,000 of their Federal Direct Unsubsidized Loans forgiven, as long as they successfully complete 15 hours of their degree requirements by the end of the semester. The remaining 100 students will be offered $2,000 in loan forgiveness if they finish 30 credit hours by the end of the school year.
"The university is focused on improving our four-year graduation rate, and the pilot program is part of its broader effort to help achieve that mission," said Tom Melecki, the university’s director of student financial services.
This new pilot drew inspiration from the State of Texas' B-on-Time Loan program, which gives interest-free loans to state residents. If students graduate with a B average or better within four years of beginning college, these loans are forgiven.
