The University of Texas at Austin has announced a pilot program to forgive some student loan debt if the students make progress toward graduating on time.
According to a press release by the university:
The University of Texas at Austin is testing a program to measure whether students can be encouraged to complete their degrees quickly by offering them forgiveness of the most expensive loans they must borrow to attend the university.
For this pilot project, the university will select 200 freshmen entering in the fall of 2013 who have been awarded Federal Direct Unsubsidized Loans on the basis of financial need. Half of the students would be offered loan forgiveness in the amount of $1,000 on the principal, plus interest accrued if they successfully complete 15 hours of their degree requirements by the end of each semester. The other half would be offered $2,000 in forgiveness, plus interest accrued, if they successfully complete 30 hours of applicable degree requirements by the end of the academic year.
The total cost of a year at UT-Austin, for Texas residents, is about $25,000.
According to the press release, the average student who takes on debt to go to college and graduates on time leaves college with $19,112 worth of debt. A student who takes five years leaves with an average $24,568. A student who needs six years is in the hole an average $31,911 upon graduation.
The most common reason students who drop out of college cite for their decision to leave is the cost.