Published on January 21, 2014,

More and more are finding out about the high taxes imposed on college students in Texas. A recent article titled Tuition set asides: Texas higher education’s hidden tax was published by Texas Watchdog Wire.

Excerpted from Texas Watchdog Wire:

A new college semester kicks off this week for students across Texas. Rising college costs continue getting well-deserved attention, but unknown to many students in public higher education institutions – not all of their tuition paid is used to fund their collegiate experience thanks to a state-mandated mechanism called tuition set asides.

Read the full article here: http://watchdogwire.com/texas/2014/01/15/tuition-set-asides-texas-higher-educations-hidden-tax/

In the 2013 legislative session I authored House Bill 830 addressing the tuition set-aside funding and the Hazlewood Act.

The Hazlewood Act provides tuition and fee exemptions to qualified veterans attending Texas public colleges and universities. In 2009, voters approved a constitutional amendment allowing veterans to pass that exemption on to their dependent child or spouse.

The Hazlewood Act is an unfunded mandate, so once a veteran of Texas either exhausts their GI Bill education benefits or obtains costs not paid for through another federal veteran’s program are absorbed by the universities.

In order to fund this program, the institution must pass this expense on to each student through increased tuition costs or reduce expenses. In 2011 alone, Texas colleges and universities provided $58 million in tuition and fees to fund the Act.

Currently, institutions of higher education in Texas are required to set aside at least 20% tuition cost on each undergrad student in excess of $46 per semester credit hour, at least 15% for grad students. This is a burdensome tax placed on every student to further their education.

Texas Education Code
Sec. 56.011.  RESIDENT UNDERGRADUATE STUDENT ASSISTANCE.

(a)  The governing board of each institution of higher education shall cause to be set aside not less than 20 percent of any amount of tuition charged to a resident undergraduate student under Section 54.0513 in excess of $46 per semester credit hour.  The funds set aside under this section by an institution shall be used to provide financial assistance for resident undergraduate students enrolled in the institution.
(b)  To be eligible for assistance under this section, a student must establish financial need in accordance with rules and procedures established by the Texas Higher Education Coordinating Board.  Priority shall be given to students who meet the coordinating board definition of financial need and whose cost for tuition and required fees is not met through other non-loan financial assistance programs.
(c)  The financial assistance provided under this section may include grants, scholarships, work-study programs, student loans, and student loan repayment assistance.

Sec. 56.012.  RESIDENT GRADUATE STUDENT ASSISTANCE.
(a)  The governing board of each institution of higher education shall cause to be set aside not less than 15 percent of any amount of tuition charged to a resident student enrolled in a graduate or professional degree program under Section 54.0513 in excess of $46 per semester credit hour.  The funds set aside under this section by an institution shall be used to provide financial assistance for resident students enrolled in graduate and professional degree programs at the institution.
(b)  To be eligible for assistance under this section, a student must establish financial need in accordance with rules and procedures established by the Texas Higher Education Coordinating Board.  Priority shall be given to students who meet the coordinating board definition of financial need and whose cost for tuition and required fees is not met through other non-loan financial assistance programs.
(c)  The financial assistance provided under this section may include grants, scholarships, work-study programs, student loans, and student loan repayment assistance.

The first 5% is dedicated to the Texas B-On-Time Loans and the remaining funds are used to fund financial assistance for qualified students.

As House Bill 830 was heard in committee, the bill separated the B-On-Time loan program and caps the financial assistance set aside to 15% giving the university the option to set aside 0-15% for the financial assistance program but in doing so must first fund the Hazlewood Act.

I felt that by rededicating some of these tuition fees we can help lower the cost of education for all, while at the same time, funding the benefits that Texas voters have supported for our Texas veterans.

The bill couldn’t get the necessary votes in committee without reverting back to a minimum of 15%. The bill, in committee was cut down to prioritizing Hazlewood Act funding.

Unfortunately, the bill did not get set for a floor vote. After discussing the issue further with the committee, a different Hazlewood funding bill emerged and was discussed on the House floor, I took to the microphone and discussed the set aside funds and my bill that had been pending in Calendars. To my surprise, very few members knew about the high tax imposed on college students in the form of the set aside.

Many students cannot afford to attend college without student loans, meaning one student will be paying interest on another student’s education for the life of the loan.

The state is pricing some students out of an education and punishing those whose parents have been saving for a college education since their child’s birth.

I am prepared to take this issue on again in 2015.