("Money - Savings" by 401(K) - 2012 via Flickr)
The University of Texas at Tyler (UT Tyler) notified students of each individual’s contribution to mandatory tuition set-aside programs in an email Feb. 9 in compliance with a state statute that requires all Texas public institutions give notice. The tuition set-aside program is a government policy that takes or "sets aside" a percentage of a student’s tuition to fund financial aid grants for needy students. Many students do not know this happens and the notification’s purpose is to alert them about where part of their tuition money goes.
Critics say the program is “classic socialism" and "indefensible." Supporters say quality higher education would be out of reach for low-income families without it.
How the state funds public education can be confusing given its many rules. Yet, students will want to know what the email notification means and what the set-aside program is.
So, to help students understand the program, here are eight things students need to know about Texas' tuition set-aside program.
1. Texas funds its financial aid grants from money it "sets aside" from each student's tuition payment. The State of Texas requires up to 15 to 20 percent of student tuition to be “set aside” by higher education institutions to pay for financial aid grants that pay for other students' tuition. Effectively, students go into debt, take out loans or work long hours to make tuition payments that, in the end, fund another student's $1,500 or $3,000 financial aid award.
Money for both Texas Public Education Grant (TPEG) and each university's financial aid grant, such as UT Tyler’s Affordable Education Grant (Ed Aff) comes from set-asides.
2. Students must "demonstrate financial need" to qualify for set-aside grants. The amount a student can receive from a TPEG grant ranges from $100 to $1,500 per year, according to UT Tyler's website. The award for UT Tyler's Ed Aff grant reaches up to $3,000 per year.
"Financial need" is a legal term and readers may not agree that someone declares to have financial need is, in fact, financially needy. Some may also disagree that the state has an obligation to fund higher education or award grants based on need.
Nevertheless, according to The Texas Higher Education Coordinating Board (THECB), a government agency that monitors higher education performance in Texas, a student demonstrates financial need if his Estimated Cost of Attendance (ECA) is greater than either his Expected Family Contribution (EFC) if he’s a dependent or his Adjusted Gross Annual Income (AGI) if he is not a dependent.
So basically if you get a negative number after subtracting your EFC from your desired institution's ECA, then you "demonstrate financial need." But there are some limitations. For example, no student who receives a TPEG award may receive more than what is his demonstrated financial need, according to state law. It is important to talk with a financial aid counselor to understand your need situation.
3. Opponents claim recipients don't receive grants but other student's money. They say to call the awards “grants” misrepresents the truth. “What they should be called is 'other students' and parents' money,'" Texas Lt. Governor Dan Patrick wrote in 2016. Patrick has long been an outspoken critic of the set-aside policy since 2009 when he was senator in the Texas Senate.
Defenders say the set-aside program represents a balanced approach to a legitimate state function—public education —and without it, financial aid funding for Texans would dry up.
4. The tuition set-asides began in 2003 when Texas deregulated tuition. The 78th Texas Legislature passed House Bill (HB) 3015 that allowed each institution to set its own tuition rates instead of having generally the same rate of tuition for every public institution. At the time, some legislators feared tuition rates would skyrocket and price low-income families out of higher education. Therefore, the legislature included a policy that intended to fund financial aid grants for low-income students, what is now the tuition set-aside program.
Critics of deregulation say since readily accessible student loans ensure that students will be able to fork out the cash no matter what, deregulation has incentivized universities to raise tuition. Opponents say the state should cut state funding altogether and let institutions compete for students without any government involvement.
5. Non-U.S. citizens, including illegal immigrants, can receive money from tuition set-asides. In 2005, The 79th Texas Legislature passed Senate Bill 1528 (SB 1528). It allowed students unable to prove U.S. citizenship to establish Texas residency. Therefore, as bone fide Texas residents, these individuals qualify for state financial aid, and this means grants from other students’ tuition set-asides.
Critics claim the policy directs taxpayer dollars away from citizens who are hurting amidst rising tuition prices. Supporters claim the policy yields economic benefits for the state through a skilled workforce.
6. Texas Republicans tried to end mandatory set-asides in 2017. Patrick led the Republican-controlled Senate to pass Senate Bill (SB) 18 which ends mandatory set-asides. However, the bill failed to make it to the floor of The Texas House of Representatives for a vote. The Texas Democratic Party platform however wants to increase the maximum amount the state is allowed to set-aside for financial aid.
7. Public institutions have to notify students how much of their tuition went to set-asides. In 2009, then-State Sen. Dan Patrick (R-Houston) along with coauthor State Sen. Juan Hinojosa (D-McAllen) led a successful effort to pass SB 1304, which required institutions to provide written notification to students of how much of their tuition went to financial aid for other students. UT-Tyler’s sent notice Feb. 9.
8. Opponents want the legislature to fund financial aid instead. Patrick said rather than have students pay for the state’s financial aid, the state should instead fund financial aid through legislative appropriations.
*Disclosure: The author is a recipient of TPEG and UT Tyler's Ed Aff grant. This article originally appeared in the publisher's previous 2017 publication Bell Tower Press. It has been abridged for print.
X:@jhescock12
Feature Image: "Money - Savings" by 401(K) - 2012 via Flickr
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