Student loans 9 February 2023

Student Loans In Texas: Paying For College In Texas

This blog post gives the different student loan options for students who are residents of Texas and those out of state students who plan on studying in Texas.

Student Loans In Texas: Paying For College In Texas

Looking to further your studies in the second largest state in the U.S.? For those who have ambitions of attending college in Texas, the state government provides various loan programs. These loans provide borrowers with the opportunity to pay for school expenses and can also help reduce the amount of debt that students have after graduation. Although there are various types of loans available in Texas, including federal student loans, private student loans, and state-sponsored loans, each one has its own advantages and disadvantages that must be carefully considered before making a decision. With the right loan, students can get the education they need and be able to start their careers on a solid financial footing. 

Types of Student Loans in Texas

Depending on the type of loan one chooses, there are different eligibility criteria, repayment terms, and interest rates applicable, which will determine the overall cost of the loan. Understanding these details before taking out a loan can help ensure that students are making the right choice for their financial situation. 

Here are the various types of student loans available in Texas:

Type of LoanEligibility CriteriaEnrollment StatusFAFSA requiredCurrent Interest Rate
Subsidized Direct LoanUndergraduate students Minimum of part-timeYes4.53%
Unsubsidized Direct LoanUndergraduate students Minimum of part-timeYes4.53%
Dependent undergraduate studentsMinimum of part-timeYes5.30%
Graduate and professional studentsMinimum of part-timeYes6.08%
Texas B-On-Time LoanUndergraduate students Texas residents to meet certain academic standardsYes4.65%
Foster Care LoanUndergraduate students Former or current Texas foster care studentsYes4.65%
Texas College Access Loan ProgramUndergraduate students Texas residents who maintain a 2.5 grade point average Yes4.75%
Perkins Loan ProgramUndergraduate studentsmaintain a 2.0 grade point averageYes5.0%
Consolidation Loan ProgramUndergraduate studentsmaintain a 2.0 grade point averageYes4.5%

Direct Subsidized Loans

Direct Subsidized Loans are federal student loans for undergraduate students with financial needs. The U.S. Department of Education pays the interest on the loan while you are enrolled in school and during certain other periods. Features of this loan include fixed, low-interest rates and flexible repayment terms.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are federal student loans for both undergraduate and graduate students. They do not require you to demonstrate financial need, and interest accrues from the time of disbursement. Direct Unsubsidized loans include a fixed, low interest rate and flexible repayment terms.

Parent PLUS Loans

Parent PLUS Loans are also federal loans most catering to parents, so they can take loans out for their dependent undergraduate children. This loan does not require the parent to demonstrate financial need, but their creditworthiness is considered. Parent PLUS loans also have a fixed, low interest rate and flexible repayment terms.

Grad PLUS Loans

Grad PLUS Loans are federal student loans for graduate or professional students who want to borrow more than the annual loan limit. There are no financial need requirements, but creditworthiness is taken into consideration. Grad PLUS loans also have a fixed, low interest rate and flexible repayment terms.

Texas B-On-Time Loan

The Texas B-On-Time Loan is a zero-interest loan for students enrolled in Texas public or private universities with a financial need. This loan is forgiven if the student meets certain academic requirements. As long as the student meets the academic requirements, there is no repayment needed. 

Foster Care Loan

The Foster Care Loan is also a zero-interest loan for foster care youth who are enrolled in an eligible college or university. This loan is forgiven if the recipient meets certain academic requirements. The Foster Care loan does not require repayment provided that the recipient meets the necessary academic requirements.

Texas College Access Loan Program

The Texas College Access Loan Program (CAL) provides low-interest loans to Texas residents who demonstrate financial need and are enrolled in an eligible college or university. In addition to the low-interest rate, there is no origination fee or prepayment penalty.

Perkins Loan Program

The Perkins Loan Program provides low-interest loans to students who demonstrate exceptional financial need and maintain a 2.0 grade point average. It also has flexible repayment terms, a fixed interest rate, and loan forgiveness for certain service-related jobs.

Consolidation Loan Program

The Consolidation Loan Program allows students to combine all their federal student loans into a single loan, with one monthly payment. It also has a fixed, low interest rate and flexible repayment terms. In order to be eligible, the student must complete the FAFSA and meet certain loan eligibility requirements.

How to Apply for a Student Loan

Make sure that you’re aware of the necessary eligibility requirements for a student loan in Texas, as these loans may provide an essential source of funding for college. Additionally, some loans have special requirements or benefits that can make them more attractive than other types of financing. 

Eligibility Requirements

Qualifying for student loans in Texas requires applicants to meet a few criteria that include the following:

  • Being enrolled in a qualifying institution, such as an eligible college or university
  • Demonstrating financial need, depending on the loan
  • Maintaining at least a 2.0 grade point average (for Perkins Loan Program)
  • Having a good credit score and/or meeting certain income requirements (for Grad PLUS Loans and Texas College Access Loan Program)
  • Meeting other criteria, such as service or job-related qualifications (for Foster Care Loan and Perkins Loan Program).


It’s also important to note that many of the loan programs have specific repayment terms and other requirements that must be met in order to qualify. Be sure to read all of the details provided by each loan program before applying.

Steps to Apply 

When applying for student loans in Texas, applicants typically need to complete the Free Application for Federal Student Aid (FAFSA) and meet certain eligibility requirements. Depending on the loan program, other criteria such as grade point average or job-related qualifications may also be necessary. For most loan programs though, documentation of financial need may also be required. The FAFSA form will ask for personal and financial information, such as:

  • Social Security number
  • Driver’s license number (if applicable)
  • Tax returns from the past two years or W2 forms 
  • Bank account balances and other asset information
  • List of colleges to which you are applying
  • Records of military or work-related experience (if applicable)


Remember to read all of the details provided by each loan program before applying, as there may be other information that you need to provide in order for your eligibility to be determined.


Are student loans in Texas taxable?

Generally, student loans are not taxable. Having said that, any interest earned on a student loan may be subject to taxation. Be sure to consult with a tax professional for more information.

How long do I have to repay my student loans in Texas?

The repayment period varies depending on the loan program but most student loans have a standard 10-year repayment term. Some loan programs may offer longer repayment periods or other options such as income-based repayment plans so it’s best to thoroughly research all of your options before making any decisions.

What happens if I default on my student loans in Texas?

Defaulting on a student loan can have serious consequences, including the inability to receive additional federal aid and negative marks on your credit report. In some cases, the entire amount of the loan may become due immediately so it’s important to contact your lender as soon as you realize you may not be able to make a payment. That way, alternative arrangements can be made.

Final Thoughts

Texas offers many student loan options for those who need them. Whether you are an undergraduate or a graduate student, there are several loan types available with fixed low interest rates and flexible repayment terms. Make it a point to research all the options available and choose the best one that meets your needs. In addition, you should always calculate the total cost of your loan before taking it out so that you know for sure that you can afford to repay it. With these tips in mind, you’ll be able to find the perfect loan for your needs.