How to Refinance or Get Texas Student Loans

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Barbecue, football, the Alamo — Texas is famous for a lot of reasons, but one you might not know about is its robust student loan options.

Home to 148 colleges and other institutions, the Lone Star State supports its booming student population with a variety of low-interest Texas student loans.

Texas college students also leave school with less debt than their peers in other states. According to The Student Loan Report, the average student in Texas left school in 2015 owing $14,469. That’s less than half the national average of student loan debt ($37,172) for class of 2016 graduates.

If you’re a Texas resident looking to take out a new student loan or refinance your education debt, read on for all your options for Texas student loans.

Low-interest options for Texas student loans

The Texas Higher Education Coordinating Board (THECB) offers two types of Texas student loans to qualifying residents.

College Access Loan (CAL) Program

The CAL Program offers educational loans to Texas students who can’t afford their school’s cost of attendance. You can take out as much as you need minus any other federal aid you’ve qualified for. The minimum borrowing amount is $100, and every loan comes with a fixed interest rate of 6.60%.

Along with being a Texas resident, you must satisfy these requirements to qualify:

  • At least half-time enrollment in a program that offers a certificate or an associate, bachelor’s, or graduate degree
  • Satisfactory academic progress, as defined by the school
  • Meet credit requirements or apply with a cosigner who has a steady income and a VantageScore of 650 or higher

If you borrow from the CAL Program, you won’t have to start repayment until six months after you leave school. Loans that are less than $30,000 have a maximum repayment period of 10 years. If you borrow more than $30,000, you can request a repayment plan of up to 20 years.

Texas B-On-Time (BOT) Loan program

The BOT Loan program is a hot ticket in the world of Texas student loans. It offers zero-interest loans that can be forgiven after graduation.

However, as of 2015, BOT Loans are no longer available to new borrowers. If you’ve already received a BOT Loan, you still can apply for a renewal.

Students looking to renew must meet these eligibility requirements:

  • Texas residency or eligibility for in-state tuition rates as a dependent child of a U.S. armed forces member
  • Enrolled full time in an undergraduate degree program
  • Eligible for federal financial aid
  • Minimum 2.5 GPA while completing at least 75% of attempted credit hours in your last semester

For the 2017-2018 academic year, renewal recipients at four-year colleges can borrow $9,050 per year. Students at public technical colleges can borrow $5,496, and community college students can borrow $3,010.

Although these loans come with a 3% origination fee, you could be off the hook for repayment after graduation. Forgiveness could be granted if you graduate on time with a GPA of at least 3.0.

Other private Texas student loans available

The Higher Education Servicing Corporation (HESC) is a nonprofit that connects students with private Texas student loans. It partners with various lenders to help students take out new education loans or refinance existing ones.

HESC categorizes its Texas student loans into three types: student loans, sponsor loans, and consolidation loans.

Student loans go to the student, who can apply with a cosigner to meet credit requirements. Sponsor loans are granted to parents or sponsors. As the student, you’ll cosign on this loan type. Finally, consolidation loans help you pay off existing private student loans. You can simplify your monthly payments and potentially snag a lower interest rate via the nonprofit’s consolidation loan.

However, Direct Loans from the federal government aren’t eligible for HESC consolidation loans. If you want to refinance federal student loans, you’ll have to do so with another lender, such as Citizens Bank or SoFi.

Here are the three main offerings you’ll find through HESC.

Texas Extra Credit Education Loans

  • Borrow from $1,000 to $65,000
  • 10- or 15-year repayment term
  • Options of immediate, interest-only, or deferred repayment
  • No origination fee
  • Variable or fixed interest rates
  • Cosigner release after 24 months of on-time repayment

Greater Texas Federal Credit Union loans

  • Borrow from $1,000 to $50,000
  • 10-year repayment term
  • Immediate, interest-only, or deferred repayment
  • No origination fee
  • Variable or fixed interest rates

You also can borrow from Aggieland Credit Union, a branch of Greater Texas Federal Credit Union. It offers loans with similar terms.

Baptist Credit Union loans

  • Borrow from $1,000 to $25,000
  • 10-year repayment term
  • Immediate or interest-only repayment
  • No origination fee

While the above are offered by HESC, they aren’t your only options for private student loans. You also might look to national lenders, such as College Ave or LendKey.

These lenders, along with others, also offer student loan refinancing. Refinancing could help you meet your debt payoff goals by lowering your interest rate or changing your repayment term.

Whether you’re looking to take out a loan or refinance loans you already have, shopping around with multiple lenders is a smart move. You can compare offers and find the lowest interest rate to reduce your long-term borrowing costs.

Federal options for Texas student loans

Federal student loans are available to students who are enrolled at least half time. In most cases, you must be working toward a degree or certificate to qualify. Further, your school must participate in the Direct Loan Program.

Federal loans, with the exception of PLUS Loans, don’t require a credit check or cosigner. They tend to come with the lowest interest rates, and they have a variety of borrower protections, including income-driven repayment (IDR) plans and forbearance in the case of financial hardship.

To be eligible, you must be a U.S. citizen or qualifying resident enrolled in an approved school. You also must submit the Free Application for Federal Student Aid (FAFSA). After submitting the FAFSA, you could qualify for one of the three loan types below.

Direct Subsidized Loans or Direct Unsubsidized Loans

Direct Subsidized Loans and Direct Unsubsidized Loans are granted to students. Undergraduate students can qualify for both subsidized and unsubsidized loans, which come with a fixed interest rate of 4.45%. Graduate students can qualify for only unsubsidized loans with a 6.00% interest rate. These loans have a 1.066% origination fee as of Oct. 1, 2017.

Students with financial need can get subsidized loans, which don’t accrue interest while you’re in school. Subsidized loans, however, come with relatively low borrowing limits, so they might not cover your full tuition bill.

If you have more costs to cover, you could fill the gap with unsubsidized loans. Anyone eligible for federal financial aid can get unsubsidized loans, which accrue interest from the date of disbursement.

You can defer payments on Direct Loans for six months after graduation. After this point, your loans are automatically put on the standard 10-year repayment plan. Alternatively, you can extend your repayment term with an IDR plan.

Your Direct Loans also might qualify for forgiveness under the Public Service Loan Forgiveness Program or Teacher Loan Forgiveness Program.

Parent PLUS Loans

Parent PLUS Loans are granted to parents or guardians of students who need additional funding to pay for school. They have a 7.00% interest rate and 4.264% origination fee as of Oct. 1, 2017.

Parents don’t need especially strong credit to qualify, but they can’t have an adverse credit history. When it comes to repayment, there aren’t as many options for Parent PLUS Loans as there are for Direct Subsidized Loans and Direct Unsubsidized Loans. Make sure to learn about the available repayment plans before borrowing.

Direct Consolidation Loans

If you’re looking to simplify your student loan situation, you could apply for a Direct Consolidation Loan. This federal loan option combines multiple loans into one, so it could be easier to keep track of your monthly dues.

Unlike refinancing, taking out a Direct Consolidation Loan can stick you with a higher interest rate. Your new rate will be the weighted average of your previous interest rates rounded up to the nearest one-eighth of a percent. So even though consolidating could simplify your monthly bills, you might see your interest payments go up.

Explore your options for Texas student loans

Whether you’re looking to cover tuition charges or refinance your Texas student loans, you have a variety of options as a borrower.

THECB offers low-interest student loans to Texas residents. Plus, HESC partners with credit unions to help you finance your education.

However, Texas grants and scholarships should be your first stop for funding. After that, consider federal student loans. Unless you or your cosigner has stellar credit, it can be hard beating the low rates on Direct Loans.

Whatever you choose, make sure to research your options and compare terms. That way, you can save yourself serious money on education costs.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.