TAMIU Student Borrowers and President Obama's Proposal for Relief

A search through previous enrollment records indicates that the student population at Texas A&M International University has been growing.  5,179 total students enrolled during the fall 2007 semester, of which 626 were first-time freshmen, compared to the fall of 2010 with 6,853 total students enrolled, of which 800 were first-time freshmen.  Additionally, for the fall 2010 semester, 2,407 undergraduate students enrolled in twelve to thirteen semester credit hours and of these students, those who were Texas residents were billed for $2,542.65 to $2720.65 respectively for tuition and fees.  These figures only cover tuition and fees for enrolled credit hours and not room and board or other yearly living expenses. This fall semester, the cost for the same twelve or thirteen credit hours has increased by over $150.  With student enrollment growing and cost of attendance rising, how are students coping with the cost of obtaining a higher education?

Christine Cortez, Financial Aid Records and Loan Coordinator from the Office of Financial Aid at TAMIU, explains that many students at TAMIU depend on federal student loans.  "We have anywhere between forty five percent and fifty percent of our students borrowing student loans," stated Cortez.  Cortez also pointed out that the amount borrowed by each student varies and their borrowing capacity also depends on, for example, classification or dependent status; however, Cortez did mention a tendency for students to borrow all of what is made available to them.  Is this possibly related to the total yearly cost of obtaining a four year degree?

According to the National Center for Education Statistics, for the 2009 to 2010 academic year, nationwide the average price for a fulltime student at a four year public institution including tuition, room and board was $14,870.  The State's Net Price Calculator at College for All Texans, an initiative of the Texas Higher Education Coordinating Board, is a tool for calculating cost of attending college.  An example of use would be calculating the cost for a nineteen year old Texas resident living at home in a four member household with two working parents making a combined income of $34,000 a year.  For this example, the computed expected total cost of attending TAMIU including books, room and board, and tuition and fees would be $14,000.  The income entered was selected based on the 2010 one year estimates American Community Survey which lists 45.4 percent of Laredo families reporting under $35,000 annual income.

Cortez noted that many students at TAMIU do qualify for the Federal Pell Grant.  According to the TAMIU financial aid website the maximum award for the 2011-12 academic year is $5,550.  It can be calculated that this amount would cover only 39% of the cost at TAMIU as described in the above paragraph.  Even a student working twenty hours a week at $7.25 an hours wage for fifty two weeks would still be short just under $1,000 of the calculated cost.  When faced with the uncertainty of steady employment versus the availability of borrowing, only one option provides a dependable solution to acquiring the funds needed to survive as a college student.

The cost and subsequent borrowing to obtain a four year degree has moved the Obama administration to introduce new, and expedite previously enacted, measures to help students who have or will accumulate college debt as announced on Oct. 26, 2011 in an address to the University of Colorado in Denver, Colorado and broadcasted throughout the nation.  The administration proposed accelerating the changes in the payment cap for the Income Based Repayment plan from fifteen percent to ten percent as soon as next year in lieu of the originally scheduled 2014 date.  The IBR option is designed for individuals whose debt balance, income, and family size do not align with the regularly expected ten year repayment plan and allows for smaller payments over the course of as much as twenty five years.  "It's a very beneficial plan, especially for students who… pursued a career that doesn't earn as much in the long run but they are… going after their lifelong dream," stated Cortez.  A few caveats that students should note are that extending repayment may lead to paying more interest over time and enrollment in the IBR plan is not an automatic process.  Borrowers will need to contact their lenders to learn more about qualifications.

    President Obama also announced a loan consolidation option that will allow qualified borrowers who have federals loans with different lenders to combine their debts into a single balance with one single monthly payment at a lower interest rate.  The President explained that this should make it easier for those in repayment to keep track of and manage payments in an effort to help reduce the risk of defaulting.

The President also discussed the "Know Before You Owe" initiative that is aimed at helping schools inform students of the options and responsibilities that come along with borrowing.  Cortez detailed that promoting "financial literacy" among TAMIU students is a major concern.  She stressed the importance of efforts in educating students about the responsibilities of borrowing only what is needed to avoid accumulating a large amount of debt by the time graduation rolls around.

Students who are interested in learning more about federal student loans as well as other options for financial aid can visit Student Aid on the Web or the TAMIU Office of Financial Aid at the USC 214, call 326-2225, or e-mail financialaid@tamiu.edu.  Information about personal loan histories can be found at the National Student Loan Data System and further details about President Obama's announcement can be found at the White House website.

The Bridge would like to hear from students about your thoughts on borrowing money for school and what that means for your future.

(Jorge Aviles can be reached at Javiles@dusty.tamiu.edu)