Students planning to borrow money from the federal government to pay for college will now pay 6.8 percent interest on their Stafford student loans.
Today, UT System Chancellor Francisco G. Cigarroa expressed his disappointment with the increase, which effectively doubled the percentage of interest rates on student loans.
The increase only applies to new loans, so loans already borrowed will remain at current interest rates, but Cigarroa says the rise is another step backward in making education affordable for Texas students.
Leaders at the University of Texas System are extremely concerned about rising rates and what they mean in the long term for access to higher education. This unfortunate scenario underscores how important it is that we continue our efforts to make college more affordable and do all we can to help students graduate on time and avoid taking on unnecessary debt.
In a phone interview today, Cigarroa says the UT system will continue to implement its Framework for Advancing Excellence, which he says also aims to reducing tuition costs for students.
"I'm glad we've been embarking upon this even two years prior to this conversation because I think we’re well on our way to doing what we can as a system to bending that cost curve," Cigarroa said.
Dominic Chavez with the Texas Higher Education Coordinating Board says prompt graduation means less debt for students.
"We know recent grads from universities in Texas took on average 142 credits to graduate with a bachelor's degree that typically requires 120. That's 22 additional credits in tuition and fees that were not necessary," Chavez said.
Since 2003, tuition at public universities in Texas has increased almost 90 percent, which mirrors tuition rates nationwide.
The Consumer Financial Protection Bureau released a report in May found students who borrow student loans are less likely to take financial risks that help boost the economy.