Stay­ing rel­e­vant

Austin American-Statesman - - WORLD & NATION -

Tor­res said fis­cal re­spon­si­bil­ity over the years has al­lowed Texas Guar­an­teed to stay afloat and said that dis­ci­pline with serve the cor­po­ra­tion well as the stu­dent loan in­dus­try goes through his­toric changes. “We’ve han­dled our funds con­ser­va­tively,” Tor­res said. “We don’t have to worry right now about whether we’re go­ing to make up those funds.”

De­spite run­ning a $56 mil­lion deficit in 2008 as a re­sult of the loss of a fed­eral pro­gram — axed as a cost-cut­ting mea­sure by the Depart­ment of Ed­u­ca­tion in 2007 — Texas Guar­an­teed had $447 mil­lion in its re­serves at the end of fis­cal year 2009, ac­cord­ing to its most re­cent an­nual re­port.

The agency em­ploys 627 work­ers and an­tic­i­pates that it may hire more em­ploy­ees who are suited to its new ed­u­ca­tional and sup­port fo­cus.

“We don’t know yet how it’s all go­ing to work,” Tor­res said. “But as far as col­leges and uni­ver­si­ties are concerned, the orig­i­na­tion func­tion is not that im­por­tant. They are concerned with delin­quency and de­fault.”

In Texas, stu­dent loans ac­count for 67 per­cent of all stu­dent aid, com­pared with 55 per­cent na­tion­ally. The high pro­por­tion of stu­dent loans taken out in the state might con­trib­ute to the high de­fault rate — 9.3 per­cent in 2007, ac­cord­ing to the most re­cent re­ports by the U.S. Depart­ment of Ed­u­ca­tion. The na­tional de­fault rate was 6.7 per­cent.

Thomas Melecki di­rec­tor of fi­nan­cial aid at the Uni­ver­sity of Texas, said he thinks the state rate would be even higher with­out Texas Guar­an­teed track­ing down delin­quent stu­dent bor­row­ers and work­ing out re­pay­ment op­tions, as it did un­der the pri­vate-lender pro­gram.

“TG’s right there on the spot. They are an ab­so­lutely fab­u­lous ser­vice and cru­cial in a state where so many rely on bor­row­ing,” said Melecki, who worked for Texas Guar­an­teed from 1982 to 1990. “Their fi­nan­cial lit­er­acy pro­gram is go­ing to be a re­ally, re­ally im­por­tant pro­gram for this state, be­cause you have a lot of low-and mid­dle-in­come fam­i­lies try­ing to fig­ure ways to send their sons and daugh­ters to col­lege. It’s a huge piece of that.”

Tor­res said Texas Guar­an­teed brings some­thing unique to the stu­dent loan mar­ket: It is lo­cal and has long-stand­ing re­la­tion­ships with Texas col­leges and uni­ver­si­ties. As such, it can pro­vide the kind of spe­cial­ized at­ten­tion to Texas bor­row­ers and in­sti­tu­tions that the Depart­ment of Ed­u­ca­tion can’t.

It’s also pos­si­ble that Texas Guar­an­teed could mar­ket its ser­vices in other states, Tor­res said, depend­ing on the need and how other guar­an­tee agen­cies func­tion in the new loan en­vi­ron­ment.

But Texas Guar­an­teed’s pri­mary con­cern is how to con­tinue to pro­vide sup­port to col­leges and uni­ver­si­ties un­der the Fed­eral Di­rect Loan Pro­gram, Tor­res said. “What’s para­mount on our mind is that this di­rect loan pro­gram works and bor­row­ers get their money just as ef­fec­tively.”

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