A proposition that will benefit all Texans!

The state of Texas is attempting to provide a better alternative. Here’s what is possible - a low-fee, low-interest-rate loan with a six-month grace period before the first payment and available graduated repayment schedule. Sound good?

It sounds good enough to possibly enable thousands more to get a college education. With that thought in mind, Texans may want to look for ways to help pass Proposition Two on the November General Election ballot.

Proposition Two would allow the Texas Higher Education Coordinating Board to issue bonds for low-interest, low-fee student loans for Texas residents seeking an associate, bachelor or graduate degree at a Texas college or university. This initiative is not only good, it will also not be costly to taxpayers in any way.

Although the proposal must be approved by voters, the loans will have no impact whatsoever on property, sales or other taxes collected by the state. The entire amount of the loan is paid for by the students who borrow the money.

While private loans are available, they often carry higher interest rates and are sometimes sold to other lenders. The advantages offered by the Coordinating Board loans include:

• A low, 6 percent fixed-rate of interest over the life of the loan
• A six-month grace period before repayment begins
• Graduated repayment schedules
• Interest that is never recapitalized
• Low fees
• Loans are never resold to lenders, and
• The loan service falls under the oversight of the Texas Legislature and the people of Texas

This student loan program came about when the Coordinating Board was given authority for administering the Hinson-Hazlewood Student Loan Program, making Texas one of the first states in the country to begin making student loans. And instead of supporting the loans with taxes, the Texas Legislature authorized the Coordinating Board to fund the loan program from funds generated from the sale of general obligation bonds. The program is self-sustaining and the Coordinating Board can also reinvest loan payments to further fund the program.

The State Constitution requires that general obligation bonds be approved by voters, and each time the issue has been put to a vote, it was in the form of an amendment to the Texas Constitution allowing the issuing of bonds to finance the loans. Proposition Two in November allows for the issuance of $500 million in general obligation bonds.

The last time voters approved bonding authority for the program was in 1999, when $400 million in general obligation bonds was approved. Coordinating Board officials estimate that all of the current bond funds will be exhausted by spring 2009.

Since 1965, Texas voters six times have approved the use of general obligation bonds for low-interest student loans. The result is that since the beginning of the program, 290,000 Texans have shared in more than $1 billion in these loans. In 2007, the average loan amount to Texas students was $9,300.

Texas students entering college today face an average cost approaching $17,000 per year to attend a public university. Although grants, scholarships and other forms of financial aid exist, the competition for this funding is increasing each year. Proposition Two offers a low-cost, low-fee alternative for all students interested in higher education. It is, without doubt, in the best interest of all Texans to ensure that a college education is attainable for all students.