The following article is an re-print of a previous article, edited and shortened for this issue's publication.
With the Census Date past on Monday, most UT-Tyler students have now paid fall tuition. However, there is a little-known statewide financial aid program that funds University aid grants from a percentage of each student’s tuition payment. The program is called the tuition “set-aside” program.
Critics say the program is "indefensible" and “classic socialism”, while supporters say without it quality higher education would be out of reach for low-income families.
To help readers understand the program, here are eight things 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' cost of education. Effectively, students go into debt, take out loans or work long hours to make tuition payments that, in the end, partially fund another student's financial aid award.
Money for both The 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 who 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 is greater than his Adjusted Gross Annual Income (AGI) if he’s 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 their 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. Critics 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 that since readily accessible student loans ensure that students will be able to fork out the cash no matter what, deregulation has universities to raise tuition. Opponents say that 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) and allowed students who were unable to prove U.S. citizenship to establish Texas residency. As bone fide Texas residents, these individuals qualify for state financial aid and this means 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.
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 The Texas Public Education Grant and UT Tyler's Affordable Education grant.
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