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From the Wall Street Journal – More Students Subsidize Classmates’ Tuition

Doug Belkin at the Wall Street Journal has released an article detailing the national picture of the redistribution of wealth occurring at public universities via secret tuition set asides. You can find the online edition by following the link below.

More Students Subsidize Classmates’ Tuition by Doug Belkin

You can also find an audio interview here.

More call for the repeal of tuition set asides

TexasGOPVote_logoDavid Bellow, Republican Candidate for Hardin County Judge recently posted two great articles on TexasGOPVote.com detailing the history of tuition set asides and is also calling to end the secret tax on higher education.

Texas Law Forces College Students to get Loans to Pay for Other People’s Tuition

STOP Texas 20% Tax on College Students! Repeal Tuition Set Aside Law!

Bill Filed to Lower Tuition Costs While Funding Veterans Education

January 30, 2013

Contact: Robert Papierz (512) 463-0661

Bill Filed to Lower Tuition Costs While Funding Veterans Education

AUSTIN – Representative Allen Fletcher has authored HB 830 to allow public institutions of higher education the flexibility to fund the Hazlewood Act.

The Hazlewood Act provides up to 150 hours of 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.

“I am proud that Texas honors its military families for their sacrifices and dedication to our country by providing them with higher education options through the Hazlewood Act. We must ensure that this program is fully funded,” said Fletcher.

The Hazlewood Act is not paid for by the state, so costs 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.

HB 830 will assist universities in paying for the Hazelwood Act through existing tuition set-aside funds. Currently, there is a required additional 20% tuition cost on each student in excess of $46 per semester credit hour. This 20% is a state required minimum and may be higher depending on the institution’s governing board. This is effectively a fee placed on every student paying tuition at that university. 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.

“This set-aside is clearly a hidden tax on students wishing to further their own education. We should not burden our children with an added 20% student debt upon graduation,” Fletcher said. “Furthermore, many students cannot afford to attend college without student loans, meaning one student will be paying interest on another student’s education for the next 10 years of their lives. The state is effectively pricing some students out of an education and punishing those whose parents have been saving for a college education since their child’s birth. 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 voters and I have supported for our Texas veterans.”

HB 830 will allow each institution’s governing board the decision to eliminate or continue the set-aside fund up to 15% of a student’s tuition costs, but that amount must first be used to fund the Hazlewood Act. The remainder of the funds will then be dedicated to providing assistance to students with financial need. The university does not have the option to opt out of participating in the Hazlewood Act.

The bill does not affect the 5% set-aside for the Texas B-On-Time loan program.

You can check status of filed bills by going to http://www.legis.state.tx.us.

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Texas Legislators Seek End to Tuition Set-Aside

Texas Legislators Seek End to Tuition Set-Aside

Shawn Johnson graduated from Texas A&M University with a bachelor’s degree in accounting and a master’s in management information systems nine months ago, but he hasn’t forgotten the day he found out about what one state senator calls a “a 20 percent backdoor secret tax” on those paying for college. At 5:48 p.m. on Friday, May 28, 2010, he received an e-mail from the school’s business office letting him know that a significant chunk of his tuition money had been used to ease the financial burden for other students.

“This communication is being sent to you for informational purposes only,” it read. “No action or response is required on your part.” But Johnson did respond. Outraged by a practice he regards as outright theft, he started a website to drum up support for eliminating it. He could get his wish this session if state Sen. Dan Patrick, R-Houston, and others have their way. Hours after Gov. Rick Perry in his State of the State address Tuesday laid out his plans to aid Texas families who “continue to struggle with the cost of higher education,” Patrick argued in a Senate Finance Committee hearing that the “secret tax” needs to end.

There are two types of tuition: “statutory” and “designated.” The former, currently set at $50 per semester credit hour, is still determined by the state. In 2003, Texas legislators passed a bill deregulating tuition at public universities, allowing them to set their own levels of designated tuition. To mitigate the burden of an anticipated tuition increase, the state required that schools begin setting aside 15 percent of designated tuition that exceeds a certain amount — specifically the $46 per semester credit hour cap that existed before deregulation — for need-based aid, including grants, work-study programs and student loans.

Another 5 percent of undergraduate tuition is set aside to fund the B-On-Time Loan program, which gives needy students a no-interest loan that is forgiven if they graduate in no more than four years with at least a 3.0 grade point average. B-On-Time loans can be awarded to private university students. One of Johnson’s complaints is that he’s being asked to subsidize somebody else’s private education.

But, in fact, Johnson is incorrect, according to Dan Weaver, an assistant commissioner at the Texas Higher Education Coordinating Board. “That’s just wrong,” he says. Only public B-On-Time loans are funded with public university tuition, while state general revenue funds go toward the private university loans.

Weaver says the misunderstanding over the B-On-Time loans is not the only thing some in the public are confused about. For one thing, he said, tuition set-asides are used at a variety of institutions, including private universities, around the country. And Texas has been setting aside a portion of statutory tuition for one of its need-based grant programs since 1975 — long before deregulation.

Since deregulation of public university tuition rates, average tuition has increased 72 percent, according to the Coordinating Board. For some students who do not qualify for need-based aid, the realization that they are unknowingly helping to ease the burden for others even as it becomes steadily worse for themselves does not sit well.

“With laws like this on the books, they are making us mortgage our education for the benefits of others,” says Johnson, who is currently in the process of paying off $15,000 in student loans.

Johnson isn’t alone in his dismay. “I got calls from people in my district who were absolutely livid,” says state Sen. Jeff Wentworth, R-San Antonio. “They just believe this is a direct theft from them.”

Wentworth and Patrick have both filed bills in the current session to do away with the practice. Patrick hoped to do that last session, but could only generate enough support for a bill requiring public universities to notify students how much of their tuition money goes to financial aid for needy students, which is ultimately how Johnson found out. It passed easily — only state Sen. Wendy Davis, D-Fort Worth, voted against it.

“I felt as though the disclosure wasn’t, in reality, about making people aware of the issue so much as it was about creating an uproar,” she says. A freshman legislator at the time, she recalls quietly voting against it “out of respect for those who filed it.” Looking back, she says that if she had stood up and explained her vote, she might have brought some of her colleagues to her side.

As for the effort this session to eliminate a key source of the state’s need-based aid, she says, “I’m very concerned, especially when we think of the state of the Texas budget today.”

The state’s massive budget shortfall, estimated at between $15 billion to $27 billion, will inevitably lead to cuts for institutions of higher education and the state-run financial aid programs that make them affordable for many Texans. The current budget proposals issued by the Texas House and Senate essentially eliminate state-funded need-based grants for incoming students over the next two years. On top of that, there is discussion in Washington of cutting back federal aid for higher education to help ease the federal deficit.

“We’re worried about whether or not we’ll have enough grants and work-study money to help keep our institution affordable,” says Tom Melecki, the director of student financial services at the University of Texas. “That makes tuition set-aside all the more important to us.”

In the worst-case scenario, Melecki says, the university will have up to $33.7 million less to provide needy students. Tuition set-asides, which currently fund 18 percent of need-based grants, would then end up funding 23 percent.

In 2009, tuition set-asides generated $22 million in need-based financial aid at UT. At Texas A&M University, the total was around $13.9 million. Statewide, schools collected $98.5 million, which funded grants for approximately 60,000 students.

Davis, who relied on need-based aid for her own college education, cites two central reasons why she believes it should be protected. First, the diversity it encourages on campus benefits all students. And, she says, “we do not want to live in a state with a have-and-have-not culture.”

She says the whole state has an interest in helping to make Texas a state with a well-trained workforce. “This is just a small part of doing that,” she says.

As Patrick’s and Wentworth’s bills are currently written, they eliminate the requirement that universities set aside a specific amount of money, but not the universities’ ability to do so. If the legislation passes, Joe Pettibon, assistant provost for student financial aid at A&M, says that money — or a portion of it — might very well stay in need-based financial aid. Or the funds could become used for merit-based aid. “Those are conversations that universities will have to have that, in some respects, could be a good thing,” Pettibon says.

That might alleviate some of the frustration of people like Johnson. “If it was going to merit-based aid, I think I would have been ok with it,” he says. That way, he would at least have the option of competing for it.

Wentworth believes that the public expectation is that a dollar-for-dollar decrease in tuition would occur if the tuition set aside mandate is repealed, and he says he expects his bill to be amended accordingly in committee.

Wentworth, among the earliest proponents of the TEXAS Grant program, the primary state-funded need-based aid program, and Patrick both say they are supportive of efforts to increase college access through financial aid and scholarships — but not this way. “We should never have done this,” Wentworth says. “This is abusive on our part.”

Patrick anticipates that the repeal will ultimately pass, but with the budget concerns highlighted by Davis and others, he says, “this session might be tough.”

This article originally appeared in The Texas Tribune at http://trib.it/eCRUls.

Taxpayers and Students Paying for Illegal Immigrant College Education

STOP TEXAS SET ASIDES
PRESS RELEASE


Taxpayers and Students Paying for Illegal Immigrant College Education

HOUSTON –The Texas Higher Education Coordinating Board recently released a report, “Eligibility for In-State Tuition and State Financial Aid Programs”, that discusses how students, including illegal immigrants, can use residency status to pay lower tuition and be eligible for state financial aid. The Coordinating Board estimates that $23.6 M in state and institutional financial aid was provided to these students in 2009. Of that, $17.7 million went to pay for the education of college students who could be in the United States illegally. Even more perplexing is that some of these funds come from tuition set asides – an embedded tax on the tuition paid by students of all Texas public universities.

In 2001, the Texas Legislature passed House Bill 1403 that made several changes to the Texas Education Code, including creating a path for non-U.S. citizens who did not claim residency status with the federal government to gain access to in-state tuition rates at Texas public institutions of higher education. These state laws attempt to circumvent the federal law by simply not asking students whether they are in the US legally. To qualify, the student must have lived with a Texas parent or guardian for 36-months up to high school graduation and sign an affidavit promising the intent to apply for permanent resident status as soon as they are able to do so. However, State law does not delegate authority to any entity to monitor whether students are complying with the content or provisions of the affidavit and no evidence has been obtained to indicate that anyone is monitoring these affidavits.

The THECB reports that in 2009 14,292 students used the provisions of TEC 54.052(a)(3) to qualify for in-state tuition rates and meet the residency requirements for state financial aid programs. Of these students, 3,716 were not legal U.S. residents and were required to complete affidavits. These same students received over 7,400 financial aid awards in 2009. Currently, affidavits are the only way to estimate the number of illegal immigrant students taking advantage of the program as the THECB does not track this information.

Students seeking financial aid that are non-U.S. citizens, who are ineligible to apply for federal student aid, who can meet the Texas state residency requirements under 54.052 and 54.053 of the Texas Education Code can complete the Texas Application for State Financial Aid (TASFA) in lieu of the FAFSA form. These students can then compete for state funds without being U.S. Citizens or legal U.S. residents and for all state financial aid programs with the exception of the B-On-Time loan program and Early High School Graduation Scholarship Program. An interesting twist is that some of these state financial aid programs, like the Texas Public Education Grant, are funded by Tuition Set Asides taken each semester from every student’s tuition.

The tuition set asides, created by House Bill 3015 in 2003, requires all public universities set aside a certain percentage (20% for undergraduate students, 15% for graduate students) of every student’s tuition each semester to fund needs-based financial assistance programs for Texas residents, including students qualifying as Texas Residents under the provisions of TEC 54.052. This means that a Texas student paying $2,500 per semester in tuition will have $500 of their tuition set aside each semester for financial assistance programs under HB 3015 which could be going to illegal immigrants.

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 families are unaware that a significant portion of their tuition is used to provide financial assistance to other students, including illegal immigrants. It seems to be a different story for illegal immigrants, who paid only $9.5 M of the $27.2 M (34%) out of pocket for tuition and fees in 2009. Taxpayers and students were responsible for paying the remaining $17.7 M tuition and fee costs for these potentially illegal immigrant students.

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Stop Texas Set Asides is an organization of current and former Texas college students who were shocked to find out that 20% of our college tuition had been “set aside”, without our knowledge, to fund another’s education. Stop Texas Set Asides is working to inform college students across the state of Texas about this hidden tax on education and put this practice to an end.

Press Release 7-14-2010

For Immediate Release: July 14, 2010

Texas Higher-Ed Students Face Ambition Tax

HOUSTON – In 2003, the Texas Legislature passed HB 3015 which deregulated tuition and required all public universities to set aside a certain percentage of every student’s tuition each semester to fund needs-based financial assistance programs for Texas residents.

This means that a Texas student paying $2,500 per semester in tuition will have $500 of their tuition set aside each semester for financial assistance programs under HB 3015. Students are obligated to pay into the fund even if they themselves receive some kind of financial aid. Over four years, the student will pay $4,000 into this program – a substantial amount considering that many students pay for college through student loans, requiring interest payments. In fact, if the student financed all of their tuition they would owe an additional $550 in interest on the tuition that was set asides for another student.

Tuition deregulation created two parts to tuition: statutory and designated.

Statutory tuition is the rate that the state mandates colleges to 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-of-state students. 15% of graduate and undergraduate statutory tuition is set aside and reserved for the Texas Public Educational Grant and Emergency Tuition and Fee Loans.

Designated tuition is determined by each institution. According to the Texas Education Code, there is no limit on how much designated tuition can be charged. Universities are required to set aside 15% of graduate and undergraduate designated tuition that exceeds of $46 per semester credit hour, and finances needs-based financial assistance programs selected at the discretion of each university. In the 2008-09 term $100 million in tuition was set aside from students for this purpose.

An additional 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 both private and public institutions, only public institutions are required to set aside students’ tuition. This creates an unfair burden for students attending public institutions by forcing them to share the bill for other students attending private institutions.

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.

Not all students benefiting from tuition set aside programs are legal Texas residents. In 2001 HB 1403 enacted a loophole for non-legal Texas residents allowing students seeking financial aid that are non-U.S. citizens, who are ineligible to apply for federal student aid, to meet the Texas state residency requirements and can complete the Texas Application for State Financial Aid (TASFA) in lieu of the FAFSA form. These students can then compete for state funds without being U.S. Citizens or legal U.S. residents and makes them eligible for financial aid programs including the Texas Public Education Grant, the Texas Grant, and Texas State Exemption Programs.

Students of Texas universities graduate with the 4th largest amount of average debt after obtaining a four-year degree in the country. Texas Commissioner of Higher Education, Raymund Paredes, says that the average Texas student graduates with about $20,000 in student loans- a figure he said has roughly doubled in the last decade.

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Live & Let Live Show – Rule of Law Radio (Part 3)

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Live & Let Live Show – Rule of Law Radio (Part 2)

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Live & Let Live Show – Rule of Law Radio (Part 1)

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KTRH Interview 7-16-2010

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