Best Ways to Pay for an Education at the University of Texas – Austin

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Problems associated with the steep ticket price of post-secondary education have been a part of the public conversation for a long time now. From 2008 to 2018, published prices for four-year private institutions increased by an average of 2.4% annually, after adjusting for inflation.  At public four-year institutions, that figure was 3.2%. Regardless of where you attend, the cost of education and the potential debt are big factors for consideration.  This makes discussions of student loans and student loan forgiveness a common cause of personal and familial stress. Fortunately, there are a number of grants, scholarships and federal student loans to assist ambitious but less-well-funded college students.

At the University of Texas – Austin, one of the largest and most prestigious public universities in the Lone Star State, tuition and fees for Texans are relatively low, but out-of-state students pay almost four times the in-state number.  Founded in 1883, the university sits on an urban campus spanning 437 acres near the center of Texas’s rapidly-expanding capital. One of the largest schools in the nation, UT-Austin boasts 18 schools and colleges including highly-ranked grad programs in Business, Engineering and Nursing.  For 2018-2019, the University of Texas – Austin tied for 49th in the US News & World Report’s Best College Rankings.

Let’s look at some of the big numbers relevant to enrollment, cost, and debt:

By the Numbers

Undergraduate Enrollment (’18 – ‘19): 39,676
Total Enrollment (’18 – ’19):   51,525
In-State Tuition & Fees (Annual): $10,606
Out-of-State Tuition & Fees (Annual): $37,480
Average Annual Cost: $18,422
Students on Financial Aid: 40%
Average Salary After Attending: $58,200
Average Total Debt After Graduation: $21,500
Average Monthly Loan Payment: $229

Grants

The first sources of financial aid to consider are grants.  Like scholarships, grants do not need to be repaid! Before you can apply for grants or any other kind of financial aid, you need to complete the Free Application for Federal Student Aid (FAFSA).  This application will assess your financial need and help you determine whether you qualify for federal grants or federal student loans.  It is also required by many universities before you apply for school loans or other student aid. If you initially qualify, the government requires you to update your FAFSA annually to maintain your federal funding.

Federal Grants

Pell Grant

The Federal Pell Grant is federal gift assistance, which means that, unlike a federal student loan, it does not need to be repaid.  Pell Grants are intended for students who display both academic promise and great financial need. Qualification for the grant and the amount awarded are based on both eligibility and enrollment status.  For qualified applicants, the amount of the grant may fluctuate by semester depending on course load. The current annual maximum award is $5,920. In 2018-2019, 24% of students at UT-Austin received money from a Pell Grant.

FSEOG

Like the Pell Grant, the Federal Supplemental Education Opportunity Grant (FSEOG) is a federally funded, need-based grant.  The FSEOG is awarded to Pell Grant recipients.  The grant award ranges from $100 to $4,000 annually depending on the student’s need.

Children of Fallen Heroes Scholarship

The Children of Fallen Heroes Scholarship is available for students who are eligible for the Pell Grant and whose parent or guardian has died while serving as a public safety officer.  Recipients of this scholarship receive the full Pell Grant amount.

State & Local Grants

Toward EXcellence Access and Success (TEXAS) Grant

In keeping with the ‘College for all Texans’ initiative, the Texas legislature established the TEXAS Grant as a way to provide additional aid for Texas applicants who show academic promise but are hampered by financial hardship. Among other requirements, applicants must have a B average (2.5 GPA) and must maintain this and other standards to continue the financial aid.  The maximum award for 2019-2020 is $9,792 annually.

Texas Advance Commitment

The University of Texas – Austin participates in a program called Texas Advance Commitment.  Funding from this commitment comes from a combination of federal, state and private sources. This financial aid initiative assists all in-state students who come from families with less than a $100,000 Adjusted Gross Income (AGI).  The program promises full-tuition coverage for students from families under $30,000 AGI. Applicants and students must maintain good standing and at least a 2.0 GPA. For this and other financial aid opportunities, Texas residents should complete the Texas Application for State Financial Aid (TASFA).  

For more information on grants, visit the resources offered by the University of Texas – Austin.

Scholarships

Scholarships, like grants, are money that the recipient does not need to repay.  Unlike grants, they are generally awarded on a combination of factors, including scholastic or athletic merit.  They tend to be awarded more specifically and come from the local level, either from the school or a private institution.

Need-Based & Merit-Based Scholarships

Applicants and current students at the University of Texas – Austin have many school and privately-funded scholarship opportunities.  These scholarships range in value from a $100 single-payment award to full cost coverage, renewed for a 4- or 5-year program. Some of the scholarships have broad criteria while others are specific to certain demographic restrictions.  Because UT-Austin and its associated funds and foundations offer so many diverse scholarship opportunities, the university provides a scholarship application portal to help students source, select and apply for funding.

For more information on scholarships, visit the resources offered by the University of Texas.

Loans

For most students, grants and scholarships will not completely meet their financial needs to attend a four-year college or university.  For students who cannot pay the balance with savings, federal student loans and private loans can make up the difference. The students at the University of Texas -Austin are no exception to this.  The average student debt upon graduation is $21,500. There are advantages and disadvantages to the different types of private and federal student loans available.

Federal Loans

There are several significant advantages to Federal Student Loans.

– Fixed Interest Rates: The national rate is set annually and holds for the term of the loan.

– Hardship Deferment: Recipients of the loan may qualify for a pause on repayments in the case of financial hardship.

– Student Loan Forgiveness:  Public servants (e.g. teachers, government workers, peace officers) may qualify to have the loan completely or partially forgiven after a period of service.

– Income-Based and Pay-As-You-Earn (PAYE) Repayment Options

Federal Student Loans fall into four distinct categories.  

Direct Subsidized Loans

Subsidized loans are available for students with financial need. These loans currently carry an interest rate of 5.05%.  Most importantly, the government pays the interest on the loan while the student is enrolled and during certain grace periods and deferment periods.

Direct Unsubsidized Loans

Unsubsidized loans are available for all undergraduate and graduate/professional students.  The current interest rate is 5.05% for undergraduates and 6.60% for graduate students. These loans also carry loan fees and the government does not cover any of the interest on the loan.

Direct PLUS Loans

These loans are available for graduate/professional students and parents of dependent undergraduate students. These loans carry higher interest rates and fees than direct loans.

Federal Perkins Loans

Perkins Loans are available for students with exceptional financial need.  The 5.0% interest rate is subsidized by the government during the period of active enrollment and for 9 months after graduation.

For more information on Federal Student Aid, visit the resources offered by the US Department of Education.

Private Loans

For students not wishing to or not able to acquire funding through federal student loans, the free market offers a plethora of borrowing options in the form of private student loans.  Private loans do not offer some of the protections provided by federal student loans, but they do have their own advantages:

Advantages of Private Student Loans

– Competition = Lower Interest Rates: Interest rates of private student loans depend on many factors including amount, length of term and credit score.  If you or a co-signer have a good credit score, you can secure a lower rate.

Refinancing Options: Like home and auto loans, private student loans can be refinanced multiple times, leading to student loan consolidation and lower rates.

– Incentives: To remain competitive, a lender may offer borrowing incentives such as on-time payment interest forgiveness and hardship protection.

Private Loan Shopping Tips

Complete the FAFSA First: While this doesn’t matter to private lenders, you should make sure you’ve exhausted all your avenues to secure finances that don’t have strings.

Establish Good Credit: Because private loans consider your credit score, you’ll need it to be in great shape.  If you don’t know what it is, subscribe to a free credit monitoring service.  Good borrower behavior like on-time payments and low credit card balances will keep your credit higher.  If you haven’t yet established credit, consider applying for a low-limit, low-interest credit card.

– Get a Co-Signer: Because student loan applicants tend to be young and in less-than-prime financial shape, sometimes acquiring a loan with a favorable interest rate (or a loan at all) can be difficult.  If a family member or trusted friend with good credit will cosign for your loan, it increases approval chances and decreases rates.

Only Borrow What You Need: Student loan debt can hang over individuals for a long time.  Consider both the short and long-term when you borrow. Use a student loan calculator to calculate how long it will take to repay what you borrow with a monthly payment you can afford. Only take out a loan for tuition and necessary living expenses.  

Top Private Student Loan Lenders

Once you have exhausted your options for free funding and thoroughly considered your personal financial situation, it’s time to shop for lenders.  Here are some of the top private student loan lenders of 2018-2019.

 

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November 19, 2019

Mark Gibson

Mark Gibson is a personal finance consultant and wealth-investor.  Mark brings his top-notch financial analysis to his work at FiGuides as our lead consumer finance editor.

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