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Texas aims to reduce student debt

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texas flag drapeau texasSTUDENT DEBT nationwide has nearly tripled in the last decade and Texas is working to reduce the burden on students looking to obtain education and training beyond high school.
On Thursday, the Texas Higher Education Coordinating Board announced a reduction in its College Access Loan interest rate from 5.25 per cent to 4.5 per cent, beginning in July.
With this, the state-run student loan program would be offering the lowest fixed interest rate in the country.
“Our goal is to make higher education more accessible and affordable for Texas students as they pursue education and training beyond high school,” Texas Higher Education Commissioner Raymund Paredes said.
“Last year we announced a lower origination fee structure. This year we offer a historically low interest rate, thanks to the prudent management of our College Access Loan program. Today, Texas is better able to help more students and families manage their education-related financial obligations and focus on successfully completing postsecondary credentials. It is important in our ongoing efforts to help move students into the workforce without crushing debt.”
CAL is a self-funded, non-profit student loan program that offers a fixed, deferred interest rate irrespective of the borrower’s credit rating.
Along with the interest rate reduction, CAL origination fees, the amount charged to cover the cost of processing each loan, were reduced to zero, three and five per cent depending on the borrower’s VantageScore. The THECB also revised its credit score requirements last year to allow for more access to low interest student loans.
Texas has also reduced the CAL default rate by better credit underwriting and default avoidance.
According to the THECB, by increasing fund balance equity shown on annual cash flows and returning excess interest and sinking funds to the CAL program, it has the resources to increase the availability of loans while also lowering the interest rates and eliminating or reducing origination fees.

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