Read Study on HB 3015 Tuition Set Asides text version

STOP TEXAS SET ASIDES

Study on HB 3015 Tuition Set Asides

Shawn A. Johnson 7/12/2010

This document provides a brief history on tuition set aside practices in the state of Texas, studies the impacts to students at Texas Higher Education Institutions, and discusses areas for abuses and shortfalls of the tuition set aside program.

Impact on Students ................................................................................................................................................................. 4 Program Funded by Tuition Set Asides .......................................................................................................................... 6

CONTENTS

Study on HB 3015 Tuition Set Asides

Background ................................................................................................................................................................................ 3

Financial Need Defined ......................................................................................................................................................... 5 Texas B-On Time Loan Program................................................................................................................................... 6

Texas Public Education Grant - TPEG......................................................................................................................... 7

Quick Overview............................................................................................................................................................... 6 Eligibility Requirements ............................................................................................................................................. 6 Award Amounts .............................................................................................................................................................. 6

Quick Overview............................................................................................................................................................... 7

Texas (Towards Excellence, Access and Success) Grant .................................................................................... 8

Eligibility Requirements ............................................................................................................................................. 7 Award Amounts .............................................................................................................................................................. 7

Texas Emergency Loan Program.................................................................................................................................. 9 Quick Facts ............................................................................................................................................................................... 12 Ap.2 ­ THECB Overview Tuition Deregulation HB 3015.................................................................................. 15

Quick Overview............................................................................................................................................................... 8

Additional Info ................................................................................................................................................................ 7

Quick Overview............................................................................................................................................................... 9

Eligibility Requirements (Initial Eligibility).................................................................................................... 8 Eligibility Requirements ............................................................................................................................................. 9 Award Amounts .............................................................................................................................................................. 9 Award Amounts .............................................................................................................................................................. 8

Moving Forward..................................................................................................................................................................... 13 Appendix ................................................................................................................................................................................... 14 Ap.3 ­ THECB Overview Residency and In-State Tuition ................................................................................ 17 Ap.1 ­ Legislation Reference Table ........................................................................................................................... 14

Page 2

Study on HB 3015 Tuition Set Asides

Texas Legislature passed HB 3015 in 2003 which deregulated tuition and enacted requirements that all public universities set aside a certain amount of every student's tuition each semester in order to fund needs-based financial assistance programs for Texas residents. Prior to tuition deregulation in 2003, the state legislature mandated flat rate tuition for all public institutions. There are now two parts to tuition: statutory and designated. Statutory tuition is the rate that the state mandates colleges charge, and is the same for all public higher education institutions. It is currently $50 per semester hour for in-state students and $327 for out-ofstate students. 15% of graduate and undergraduate statutory tuition is set aside and reserved for the Texas Public Educational Grant and the Emergency Loan Program. Designated tuition, on the other hand, is determined by each institution. According to the Texas Education Code, there is no limit as to the amount of designated tuition that can be charged. 15% of graduate and undergraduate designated tuition that exceeds of $46 per semester credit hour is set aside and goes to the University's tuition grant account. Another 5% is set aside from undergraduate designated tuition to fund the Texas B-On Time Loan Program. Set asides collected for this program go to the Texas Higher Education Coordinating Board, which controls the program. Although the B-On-Time program awards loans to private and public institutions, only public institutions are required to set aside students' tuition to fund the program. This creates an unfair burden for students attending public institutions because they must provide the funding for the program, but both private and public universities have access to the funds. Financial need is determined based on the student's Federal Application for Financial Aid (FAFSA) and the estimated cost of attendance as established by each institution. Students seeking financial aid that are non-U.S. citizens, who are ineligible to apply for federal student aid, can meet the Texas state residency requirements under House Bill 1403 and can complete the Texas Application for State Financial Aid (TASFA) in lieu of the FAFSA form. Students who are eligible to complete the TASFA application can then compete for state funds without being U.S. Citizens or legal U.S. residents. In June 2009, the Texas Legislature passed S.B. 1304 which requires public institutions to notify students of where their money is going. This bill, which took effect beginning the Spring 2010 semester, requires universities provide each student a notice regarding the specific amount of their tuition required to be set aside. Since 2003, tuition rates have increased 86%. As the costs associated with higher education have continued to rise, more students and families are struggling to pay for college and must find additional funding sources to meet the growing costs. Yet many of these same students are unaware that a significant portion of their tuition is used to provide financial assistance to other students.

BACKGROUND

Page 3

Study on HB 3015 Tuition Set Asides Texas has experienced an 86% increase in tuition rates since 2003. A closer inspection on tuition set aside practices reveals that these tuition set asides may represent a significant catalyst for these drastic cost increases. To illustrate this theory, consider an undergraduate student at Texas A&M University: · · ·

IMPACT ON STUDENTS

In 2003, the student would have paid only $1,3803 in tuition for the same 15 hour semester. This means that tuition has increased $1,188 at Texas A&M University since 2003. Of this $1,188 increase, $5134 (43%) is a result of the tuition set aside practice.

So the student will have to pay an additional $3,258 to obtain their four-year degree due to the set aside tuition and interest on set aside potion the student loan.

The student will pay $2,5681 in tuition per semester (15 hour semester) Over four years, the student will pay $20,545 in tuition of which $2,718 will have been set aside for needy students. Having borrowed $20,545 for tuition, the student will make $28,3722 in cumulative payments ($540 in interest on the loan principle that was set aside for other's).

1Tuition

rate based on undergraduate resident tuition and fees for Fall 2009/Spring 2010. Tuition costs found at http://finance.tamu.edu/sbs/tuition/UG-Resident-FY10.pdf. 2The typical payback period for student loans is 10 years with a 6.8% interest rate (when the prime rate is at 0%). 3 http://finance.tamu.edu/sbs/tuition/Historical-Tuition-Fees.xlsx 4$2568 - $1380 = $2465 * 20% = $513

Page 4

Expected Family Contribution (EFC) - EFC is the amount of out-of-pocket expense that a

Cost of Attendance (COA) - The cost of attendance (COA) is an estimate of what it costs the Financial Need - Financial need is the basis for awarding most student aid programs. Financial

need is determined by the following equation: typical student to attend the university. This estimate is made by each university. It includes tuition and fees, room and board, and allowances for books, supplies, transportation, loan fees, and personal expenses.

student [and their parent(s)] is expected to provide toward your educational costs, either from income, savings, or a non-need based loan. The EFC is calculated from the information the student [and their parent(s)] report on the Free Application for Federal Student Aid (FAFSA) or the Texas Application for State Financial Aid (TASFA). The calculation of the EFC is established by law and is used to measure a family's financial strength on the basis of the family's income, assets, family size, and number of family members in post-secondary education. It is used to determine eligibility for most student aid programs.

FINANCIAL NEED DEFINED

Study on HB 3015 Tuition Set Asides

Cost of Attendance (COA) ­ Expected Family Contribution (EFC) = Financial Need

Your eligibility for need-based aid is determined by subtracting other outside financial assistance (scholarships) from the calculated financial need.

Financial Need - Other outside Financial Assistance = Eligibility for need-based aid

(grants, subsidized student loans and work study)

Source: https://financialaid.tamu.edu/basics/financial_need.aspx

Page 5

TEXAS B-ON TIME LOAN PROGRAM

QUICK OVERVIEW

· · · · · · · · ·

ELIGIBILITY REQUIREMENTS

·

For 2010-2011, the state amount is approximately:

AWARD AMOUNTS

· · · ·

Has completed a FAFSA application and are eligible for federal financial aid Enrolled full-time in undergraduate degree or certificate program at an eligible institution Be a Texas resident or be entitled to pay resident tuition rates as a dependent child of a member of the U.S. armed forces Graduated in the 2002-2003 academic year or later from a high school operated by the U.S. Department of Defense or under the recommended high school program from a public or accredited private Texas high school OR Have earned an associate's degree from an eligible institution no earlier than May 1, 2005 4-year public and private institutions: $3,390/semester ($6,780/year) 2-year public and private junior colleges: $890/semester ($1,780/year) Public technical colleges: $1,575/semester (3,150/year) 3% origination fee deducted from loan proceeds

Undergraduates students, full-time status 0% interest Loan forgiven if student graduates in 4 years under 150 hours with a 3.0 GPA or higher o Loans forgiven must be reported to the IRS as taxable income Awarded to Private & Public Universities Funded by 5% of set aside on Designated Tuition

PROGRAM FUNDED BY TUITION SET ASIDES

Study on HB 3015 Tuition Set Asides

Page 6

TEXAS PUBLIC EDUCATION GRANT - TPEG

QUICK OVERVIEW

· · · · · ·

Study on HB 3015 Tuition Set Asides

ELIGIBILITY REQUIREMENTS

· · · ·

Funded by Tuition Set Asides on Statutory Tuition FAFSA or TASFA required**** ½ time enrollment Undergraduate, graduate, and professional students Public colleges or universities in Texas make TPEG awards from their own resources. Only public colleges or universities in Texas may participate in the program

AWARD AMOUNTS

· · ·

Are Texas residents, non-residents or foreign students Show financial need Register for the Selective Service or are exempt from this requirement Each institution may set its own priorities in making awards to undergraduate or graduate students; to full- or part-time students. Check with your institution to find out these requirements. No individual award may be more than the student's financial need Each institution may set its own maximum award amounts.

ADDITIONAL INFO

·

Your eligibility for this program is determined by the financial aid office at your college. Funds may not be immediately available to you at the beginning of the semester. Contact your college financial aid office for additional information on eligibility of availability of funds. To read more about this program see: Texas Education Code, Chapter 56.031 and Coordinating Board Rule, Chapter 22D

Page 7

TEXAS (TOWARDS EXCELLENCE, ACCESS AND SUCCESS) GRANT

QUICK OVERVIEW

· · · · · FAFSA or TASFA required Undergraduate students only, ¾ time enrollment Used to attend any public institution of higher education in Texas Established to aid well-prepared high school graduates in financial need attend college. Universities and colleges are required to cover all tuition and fees for students receiving the Texas Grant Texas resident Has not been convicted of a felony or crime involving a controlled substance Show financial need (Estimated Family Contribution $4000 or less) Be a graduate of an accredited high school in Texas not earlier than 1998-99 school year Register for Selective Service or are exempt from requirement Graduated from accredited Texas high school no earlier than the 1998-99 school year Completed the recommended high school program or Distinguished Achievement Program Enrolled in a non-profit Texas public college or university within 16 months of graduation from a public or accredited private high school in Texas Accumulated no more than 30 semester credit hours, excluding those earned for dual or concurrent courses or awarded for credit by examination (AP, IB or CLEP)

Study on HB 3015 Tuition Set Asides

ELIGIBILITY REQUIREMENTS

· · · · · · · · ·

(INITIAL ELIGIBILITY)

For 2010-2011, the state amount is approximately: · ·

The award amount is equal to the student's tuition and required fees.

AWARD AMOUNTS

·

$6,780 per year for public universities and state college students $1,780 per year for public community college students $3,150 per year for public technical college students

Page 8

TEXAS EMERGENCY TUITION AND FEE LOANS

QUICK OVERVIEW

· · · · · ·

Study on HB 3015 Tuition Set Asides

ELIGIBILITY REQUIREMENTS

· ·

Funded by Tuition Set Asides on Statutory Tuition Covers the minimum due on tuition & fees at registration for fall and spring semesters. Does NOT cover room and board charges. For the summer sessions it covers the entire amount of tuition and fees owed. Accrue interest 5% from the date it is receipted to your account to the due date, regardless of the semester. After the due date, an additional 10% interest is added as a delinquent fee. GPA Requirements vary by institution Enrolled at least half time Cannot be in default on educational loans at any other school

·

·

AWARD AMOUNTS

· ·

Covers the minimum due on tuition & fees at registration for fall and spring semesters. o It will be due 90 days from the date it is receipted to your account. Does NOT cover room and board charges. For the summer sessions it covers the entire amount of tuition and fees owed. o Summer tuition loans are 30 day loans.

Page 9

HB 3015 Set Aside Analysis (Data provided by the Texas Higher Education Coordinating Board)

Study on HB 3015 Tuition Set Asides

Designated Tuition Set Asides (by year)

$140,000,000.00 $120,000,000.00 $100,000,000.00 $80,000,000.00 $60,000,000.00 $40,000,000.00 $20,000,000.00 $0.00 2005 HB3015 Grad 2006 2007 2008 2009

HB3015 Undergrad

Total Designated Tuition Set Asides Total Designated Tuition Set Asides $49,669,831.00 $57,410,898.00 $86,082,717.00 $103,192,848.00 $119,630,981.00 $415,987,275.00

Year 2005 2006 2007 2008 2009 Grand Total

HB3015 Grad $10,183,581.00 $8,470,020.00 $12,835,495.00 $16,911,787.00 $20,286,401.00 $68,687,284.00

HB3015 Undergrad $39,486,250.00 $48,940,878.00 $73,247,222.00 $86,281,061.00 $99,344,580.00 $347,299,991.00

Page 10

HB 3015 Set Aside Undergrad Award Information (from Designated Tuition Set Asides)

Year HB3015 Grants/Scholarships # Students 2005 2006 2007 2008 2009 37,918 36,659 50,696 61,257 59,537 $ Awarded $33,716,366 $31,087,704 $70,447,818 $89,062,109 $95,763,017 85 86 46 $294,981 $374,954 $181,803 558 $109,124 1 $2,300 HB3015 Loans HB3015 Other Aid HB3015 Work-Study Total HB3015 Aid

Study on HB 3015 Tuition Set Asides

# Students

$ Awarded

# Students 1

$ Awarded $2,950

# Students 297 499 419 599 290

$ Awarded $286,459 $502,029 $559,363 $852,181 $395,759

Total # Unduplicated Students 38,216 37,158 51,201 61,942 60,431

Total $ Awarded $34,005,775 $31,589,733 $71,304,462 $90,289,244 $96,449,703

Page 11

Study on HB 3015 Tuition Set Asides

Student Loans in Texas ·

QUICK FACTS

· ·

Effects of In-State Tuition for Illegal Immigrants · ·

Texas Commissioner of Higher Education Raymund Paredes say that the average student graduates with about $20,000 in student loans, a figure he said has roughly doubled in the last decade. (http://www.texastribune.org/stories/2010/jan/18/tuition-time-bomb/) He has said that in 2008 58% of students had to obtain loans for college. Graduates of Texas universities graduate with the 4th largest average debt amount after obtaining a four-year degree in the U.S. 59% of outstanding student loans in the State of Texas are in default or delinquent status. 12,138 students (non-legal Texas residents) in Texas benefitted from the law during the fall 2009 semester. Texas awarded approximately $33.6 million in-state and institutional financial aid to those students between fall 2004 and summer 2008. (http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/0315dnmetimm igcount.3d35b14.html)

Page 12

Study on HB 3015 Tuition Set Asides

Who is working to stop tuition set asides? Organization Contact Name

MOVING FORWARD

Stop Texas Set Asides Americans for Prosperity Sen. Dan Patrick Sen. Mike Jackson Rep. Ken Legler Next Public Hearing: ·

Shawn Johnson [email protected] Chris Covo [email protected] Marian [email protected] Wallace Beth Shields [email protected] Brad Tegeler [email protected]

Email

713-454-9849 210-687-4632 512-463-0107 512-463-0111 512-463-0460

Phone

Senate Committee on Higher Education:

9:00 AM, Thursday, August 19, 2010

For more information visit Stop Texas Set Asides: Website: Email: http://www.stoptexassetasides.org [email protected] Page 13

Study on HB 3015 Tuition Set Asides

AP.1 ­ LEGISLATION REFERENCE TABLE Topic

APPENDIX

Resident Undergraduate Student Assistance Resident Graduate Student Assistance Notice to Students Regarding Tuition Set Aside for Financial Assistance Texas Public Education Grant/Emergency Loans­ Source of Program Funding B-On Time Loan Program ­ Tuition Set Aside For Program Notice to Students Regarding Tuition Set Aside for Financial Assistance - Administrative Rules Determination of Resident Status

Texas Education Code Section 52.011 Texas Education Code Section 56.012 Texas Education Code Section 56.014 Texas Education Code Section 56.033 Texas Education Code Section 56.465 Texas Administrative Code Chapter 21 Subchapter QQ Sections 21.2230-21.2232 Texas Education Code Section 54.052-54.054

Source

Page 14

Tuition Set-Asides - House Bill 3015, 78th Texas Legislature

Prior to 2003, the Texas Legislature had the regulatory authority to set tuition rates, generally mandating that the same statutory and designated tuition rate be charged across the state. In 2003 the 78th Legislature passed House Bill (HB) 3015, amending Texas Education Code (TEC) §54.0513 to allow governing boards of public universities to set different designated tuition rates. There is no upper limit on the amount of designated tuition that a university may charge and the amounts may vary by program, course level, and academic period. Tuition deregulation became effective September 1, 2003, and universities began increasing designated tuition in spring 2004. In addition to granting institutions the authority to set tuition rates, the legislation requires universities to setaside a portion of tuition revenues for financial aid targeted to financially needy students. Statutorily, there are two types of tuition charges for undergraduate students attending a general academic teaching institution, health-related institution, or an institution in the Texas State Technical College System -- statutory tuition and designated tuition. Statutory tuition is prescribed by the Legislature and is currently set at $50 per semester credit hour. Institutions award Texas Public Educational Grants from statutory tuition set-asides. Below is a detailed description of designated tuition as it currently applies. Designated Tuition and Tuition Set-Asides Designated tuition is set by the institutions, and is the portion of tuition that was deregulated beginning with the spring 2004 semester.* HB 3015 also amended the Education Code by adding §56.011 and 56.012, which require universities to set aside at least 15 percent of the amount of undergraduate and graduate designated tuition charged in excess of $46 per semester credit hour. This set aside is to be used to provide financial assistance for financially needy undergraduate or graduate students. These funds are intended to lessen the impact of tuition deregulation. HB 3015 also required institutions to set aside five percent of the undergraduate amount of designated tuition charged in excess of $46 per semester credit hour to fund the B-OnTime (BOT) Loan Program. The total financial aid set-asides (not including BOT) for fiscal years 2005-2008 was $248 million for undergraduates and $48 million for graduate students. In FY 2008, over $99 million in financial aid was disbursed to needy students through HB 3015 tuition set-asides. As the chart shows above, 78 percent of the aid was awarded through state grants. Approximately 58,948 awards were made to over 53,900 students using HB 3015 tuition set-asides in FY 2008.

THECB 02/2010 Page 1 of 2 * Designated tuition existed prior to 2004, but the rate set by the institution could not exceed the rate set by the Legislature for statutory

tuition.

For more information:

Office of External Relations Texas Higher Education Coordinating Board [email protected] (512) 427-6111

THECB 02/2010 Page 2 of 2

Residency and In-State Tuition

Who pays in-state tuition? Persons classified as residents for higher education purposes under Texas law may pay in-state tuition. Although the State of Texas does not have any programs specifically for undocumented students, some undocumented persons are among those who are eligible for in-state tuition under current residency statutes. The residency statutes for higher education purposes have evolved somewhat over the past 7 years. What is House Bill 1403 (passed by the 77th Texas Legislature in 2001)? House Bill 1403 granted certain non-immigrant students, including undocumented students, access to in-state tuition rates at Texas public institutions of higher education and state financial aid. To qualify, the bill required students to have: o resided in Texas with a parent or guardian while attending high school in Texas, o graduated from a public or private high school or received a GED in Texas, o resided in Texas for the three years leading to graduation or receipt of a GED, and o provided their institutions a signed affidavit indicating an intent to apply for permanent resident status as soon as able to do so. The bill passed and was codified as Texas Education Code (TEC) 54.052(j). What were the implications of HB 1403? This law allowed individuals who were not permanent residents or citizens of the United States to be classified as residents for higher education purposes if they met the requirements outlined above and provided their institutions an affidavit indicating they would apply for permanent residence as soon as they were eligible to do so. Numerous visas issued by the federal government allow documented individuals to reside in the United States. If these individuals met the requirements outlined above, they were residents of Texas by state law. Undocumented students also could be classified as residents if they met those requirements. Were there any legal problems with HB 1403? During the years when TEC 54.052(j) was in effect, there were claims made that it was unconstitutional and could be the basis of a lawsuit since it allowed certain individuals to be treated differently than others. This situation changed with the passage of SB 1528, 79th Texas Legislature, Regular Session, effective September 1, 2005. This bill repealed the old residency statutes, including TEC 54.052(j), applicable to students beginning in spring 2006. What is Senate Bill 1528 (passed by the 79th Texas Legislature, Regular Session, in 2005)? Senate Bill 1528 amended the provisions of House Bill 1403 so that they applied to all individuals who had lived in Texas a significant part of their lives. Citizens, Permanent Residents and certain non-immigrant students could establish a claim to residency following its provisions. To qualify, the individual must have: o lived in Texas the 3 years leading up to high school graduation or the receipt of a GED; and

THECB 09/2008 Page 1 of 2

o

resided in Texas the year prior to enrollment in an institution of higher education (which could overlap the 3-year period).

In addition, if the student was not a U.S. Citizen or Permanent Resident, he/she had to file an affidavit with his/her institution, indicating an intent to apply for Permanent Resident status as soon as able to do so. The bill passed and was codified as TEC 54.052 through 54.056. What are the implications of SB 1528? As with House Bill 1403, the new statute, passed in 2005, allows certain international students to establish a claim to residency for higher education purposes. In addition, it allows US Citizens or Permanent Residents to establish an independent claim to residency based on graduation from high school or the completion of its equivalent after residing in the state for at least 36 months. The fact that this provision applies to all high school graduates relieves the state of any threat of a law suit based on preferential treatment. More importantly, it allows high school graduates to establish their own basis of residency by having lived here for the three years leading up to graduation. In the past, students born and raised in Texas but whose parents moved out of state before they had enrolled in college were statutorily classified as nonresidents, whether they had ever lived outside the state or not. Students raised by grandparents or other family members who had never gone to court to acquire legal custody were considered residents of the state in which their biological parents lived, whether or not those parents were in any way involved in their upbringing. The new provisions of TEC 54.052(a)(3) enable these students, and all other students who graduate from high school in Texas under the prescribed conditions, to be classified as residents and allow them to enroll while paying the resident tuition rate. It is important to note that the statute indicates these students are not nonresidents who are getting to pay the resident rate due to a waiver of nonresident tuition. They are classified as bone fide residents under current statues. How many students has this affected? The number of students qualifying under these provisions is relatively small. The full population of students reported as residents under the residency provisions of TEC 54.052(a)(3) totaled 9,062 students in fall 2007. The state's public institution total enrollment that term was 1,102,572. Therefore, the TEC 54.052(a)(3) students represented slightly more than eight tenths of one percent of the public institution enrollment.

For more information:

Office of External Relations Texas Higher Education Coordinating Board [email protected] www.thecb.state.tx.us/Agency/Topics.cfm (512) 427-6111

THECB 09/2008 Page 2 of 2

Information

Study on HB 3015 Tuition Set Asides

18 pages

Report File (DMCA)

Our content is added by our users. We aim to remove reported files within 1 working day. Please use this link to notify us:

Report this file as copyright or inappropriate

1037802


You might also be interested in

BETA
Study on HB 3015 Tuition Set Asides
Microsoft Word - UTPA 7.27.04.doc
Ready, willing, and unable: How financial barriers obstruct bachelor-degree attainment in Texas
AP European History 2010