TG

The Guarantor of Choice SM

TG's Legislative Report

May 17, 2004

The Sunset Review of the Texas Guaranteed Student Loan Corporation

The mission and performance of the Texas Guaranteed Student Loan Corporation (the Corporation) are currently being reviewed by the Legislature as required under the Texas Sunset Act. The Act provides that the Sunset Commission, composed of legislators and public members, periodically evaluate certain state agencies and entities to determine if they are still needed, and what improvements are necessary. Based on the recommendations of the Sunset Commission, the Texas Legislature ultimately decides whether an entity continues to operate into the future.

The Sunset review involves three steps. First, Sunset Commission staff will evaluate the Texas Guaranteed Student Loan Corporation and, in October, 2004, will issue a report recommending solutions to problems found. The Sunset Commission will then meet to hear the recommendations of the Sunset staff and public testimony on the Corporation. This meeting is tentatively scheduled for November, 2004. Based on public input and the Sunset staff report, the Sunset Commission will adopt recommendations for the full Legislature to consider when it convenes in January 2005.

Through the Sunset review, every Texan has the opportunity to suggest ways in which the mission and operations of the Corporation can be strengthened. If you would like to share your ideas about the Corporation, please contact Lori Hartman of the Sunset staff. Suggestions are preferred by July 30, 2004, so they can be fully considered by the Commission staff.

Sunset Advisory Commission
P.O. Box 13066
Austin, Texas 78711
(512) 463-1300
Fax: 512/463-0705
E-mail: sunadmin@sunset.state.tx.us

Information about the Sunset process, including more information on Sunset Commission meetings, can be found at www.sunset.state.tx.us.

The Sunset Commission's Feedback Form can be accessed at www.sunset.state.tx.us/question.htm.

TG's Self Evaluation Report can be accessed at www.sunset.state.tx.us/79threports/tgsl/ser.pdf.

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Texas Student Financial Aid Community Well Represented During Legislative Committees' Consideration of Recommendations to Improve Student Financial Aid in Texas

For the past several years, the Texas student financial aid community has been working together to keep Texas' 34 congressional offices informed about the importance of the federal student financial aid programs in providing financial access to higher education for Texas' students and families through joint position statements and periodic trips to Washington, DC to visit selected Texas congressional offices by representatives from TASFAA, ATLE, and TG. Since 1998, the Texas student financial aid community has issued several joint position statements and position papers on the HEA reauthorization, annual appropriations for the Title IV student aid programs, and other ad hoc issues like student loan consolidation.

However, a parallel activity has been happening in Texas and the Texas Legislature also involving student financial aid, and the Texas student financial aid community, led by the Texas Association of Student Financial Aid Administrators (TASFAA), a dynamic group of TASFAA leaders, with the strong and effective support and assistance of other organizations, primarily the Independent Colleges and Universities of Texas (ICUT).

Since 1998 — when the TEXAS Grant program was being developed by the House Higher Education Committee — the Texas student financial aid community has become increasingly involved in a formal way with the state and national legislative processes. That is, TASFAA, as an organization, is increasingly being turned to by Texas policymakers — in Austin and Washington, DC — to provide input to individual legislators and staff, as well as, to provide testimony before legislative committees on student financial aid issues.

The involvement has been beneficial in raising the community's profile among the state's policymakers as a reliable, credible, and professional resource for input, advice, and counsel on matters concerning student financial aid in Texas.

For example, during this interim period between the 78th Regular Session of Texas Legislature, which ended on June 1, 2003, and the upcoming 79th Regular Session which convenes on January 11, 2005, there are three separate legislative committees studying various aspects of student financial aid and ways to improve access to higher education in Texas. These are the Joint Committee on Higher Education, the House Committee on Higher Education, and the Senate Subcommittee on Higher Education.

For the first time:

  • A panel of TASFAA representatives was requested to offer testimony on student financial aid before each of these Committees.
  • TASFAA was asked to submit recommendations to the legislature on how the state might improve the administration and delivery of student financial aid to Texas students.
  • TASFAA is becoming a source for student financial aid training for state legislative staff interested in becoming familiar with the student financial aid application delivery and administrative processes.

Additionally, the legislature directed the Texas Higher Education Board to conduct a statewide study of student financial aid with the Texas student financial aid community and make recommendations to the 79th Texas Legislature on ways to improve the programs. The Texas Financial Aid Steering Committee, composed of eight Texas student financial aid directors, a student, as well as representatives from the ICUT, the Coordinating Board, TG, and the State Auditor's Office, has met several times since January for full day sessions, and, so far, been highly productive. The report and recommendations are scheduled to be completed and ready for consideration by the Board by June.

TASFAA, and all are to be highly commended for contributing to the productive and cooperative environment in which the Committee has worked, and, what promises to be, a valuable and comprehensive report representing — again, for the first time — the views and recommendations for improving student financial aid in Texas of the entire Texas student financial aid community.

Also, special thanks go to the Independent Colleges and Universities of Texas (ICUT) for taking the lead on much of the work that has been done to strive toward the development of a unified voice on student financial aid issues in Texas.

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University of Texas at Austin President Endorses Enrollment Strategy Recommendations

University of Texas at Austin president Dr. Larry R. Faulkner endorsed the Task Force on Enrollment Strategy recommendations that include increasing the size of the faculty, reducing the student population to 48,000 over the next five years and pursuing legislative changes that would limit the percentage of new students admitted under the state's Top 10 Percent Law.

The task force, headed by Dr. Isabella Cunningham, chairwoman of the Department of Advertising, emphasized that the size of the student body must be driven by the university's goal to be one of the top three public universities in the nation and that quality of education must be the first priority.

"The report commands very broad support," Faulkner said, "especially with respect to the main goals. There is enthusiasm for its focus on improvement in the educational environment, and there is agreement that reduction in the student-faculty ratio must be a high priority. There is also broad support for the detailed recommendations concerning student progress. Accordingly, I accept the report with enthusiasm and will now move toward its implementation."

Faulkner said this summer members of his staff will catalogue the points of action suggested in the report and determine what officers of the university will be assigned responsibility for defining practice and policy related to the recommendations.

The 19-member Task Force on Enrollment Strategy, appointed by Faulkner in October 2002, endorsed the university's recommendation to the University of Texas System that race and ethnicity be among the criteria considered in the holistic review of applicants for admission to the university.

"The task force states emphatically that the university must continue to provide to all its students the high quality of education that it has always made available," Cunningham said. "In addition, it is essential that the university be a diverse and united community to foster the social growth of all its members."

The task force's recommendation that the university pursue legislative changes to the state's Top 10 Percent Automatic Admissions Law (HB 588) was based on reasoning that the use of class rank exclusively for the admission of an increasingly larger portion of freshmen limits the discretionary power of the university to achieve a representative student body. From 1998 through 2003, the number of top 10 percent students enrolling in the freshman class at the university through automatic admission has increased to 65 percent. The task force recommended that the university be required to admit 50 percent but not more than 60 percent of a freshman class through automatic admission under the law.

The task force divided its work into two categories for recommendations — long-term strategies and short-term strategies. Cunningham said that while the group has recommended reducing the size of the student body over the next five years to a population of about 48,000 students compared to the 51,426 enrolled during the fall 2003 semester, the long-term strategies do not exclude the possibility of further growth in the size of the university. The task force also has not excluded the possibility, as enrollment policies are reviewed, to further decrease the size of the university.

To preserve and enhance the quality of students' educational experiences, the task force said, the university must reduce its student/faculty ratio, which is now about 21 to one. At institutions with which the university likes to compare itself, the ratio is about 19 to one, the task force said. It recommended increasing the size of the faculty by about 170 to improve the ratio.

The task force recommended decreasing the time of graduation to 10 long semesters and implementing incentives for students to carry at least 14 hours per semester. Decreasing students' time to graduation is an important step in helping to control costs, the task force said, and it is a key factor in enhancing quality by improving the student/faculty ratio. The task force said the university's enrollment situation should be reassessed starting in fall 2008, noting that it is unwise to advance a strategy to be pursued beyond a five-year window.

The group's short-term recommendations include placing a limit of 10 long semesters in residence for students to complete a baccalaureate degree and increasing to 15 the minimum number of required hours to be eligible for certain honors programs and merit-based scholarships. The task force also recommended reevaluating policies related to students returning from scholastic dismissal and placing limits on the number of students admitted from other University of Texas System component institutions under the pilot Coordinated Admissions Program.

The report also said the graduation rate at The University of Texas at Austin is lower than peer institutions because of the average number of semester-credit hours taken by undergraduates.

"To enhance this rate, we will have to induce our students to increase their course loads," the report said. It recommended increasing the average number of semester credit hours taken by undergraduates from its current level of 13.11 to 14.

"The report states clearly that a typical student who graduates from The University of Texas at Austin with one major takes an average of 142 hours or more, while only 120 hours is required for most majors," Cunningham said. "Students who graduate with two majors take an average of more than 170 hours."

The task force said the Office of Admissions, in consultation with the Admissions and Registration Committee of the Faculty Council, should develop more rigorous administrative policies that require reapplication for graduating students who wish to continue as students, as well as students who have been absent from the university for a long-session semester or longer. The task force recommended that the Office of Admissions review its policies for readmission and strictly enforce deadlines for application for readmission.

Changing colleges and majors also was addressed by the group, which recommended that the ability for students to make these changes remain at the discretion of the dean of that college or school. Approval by the dean of the college or school also would be required for exceptions to a proposal that students not be allowed to apply more than once for admission to a restricted program.

Other short-term recommendations:

  • The university should develop a policy to limit the number of times a student may drop a course or withdraw from the university.
  • Additional classroom space should be built or developed from existing space. In addition, the Office of the Registrar should develop a campus-wide policy for reserving classrooms to ensure the most effective use of available classroom space, at both the university-wide and departmental levels.
  • Seniors nearing graduation should be given preference in registering for required classes.
  • The number of credit hours a student must complete at another school before applying for transfer to the university should be increased. The task force recommended that a transfer student be required to have earned 30 semester hours after high school graduation.
  • The task force recommended that no change be made in the normal process for graduate student admissions, but endorsed the university's recent recommendation to the University of Texas System that race and ethnicity be among the criteria considered in the holistic review process.

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HEA Reauthorization Update

While the Senate Republicans have yet to file a HEA Reauthorization bill (The Democrat's S. 1793 is the only Senate bill.), the House Republicans have filed its version of the Reauthorization bill, HR 4283. A bipartisan Reauthorization bill dealing with student loan issues, HR 4102, has also been filed. HR 4283 is titled the College Access and Opportunity Act of 2004, and HR 4102 is titled the Access and Equity in Higher Education Act of 2004.

While there is substantial overlap already between the two bills, HR 4102 includes Sections that expand repayment options for student loan borrowers and lower the interest rate for consolidation loan borrowers whose payments exceed 8 percent of their total income to 1 percent above the 91-day Treasury Bill (instead of 2.3 percent), and lower the interest rate cap from 8.25 percent to 5 percent, 4 percent, and 3 percent for Consolidation loan borrowers whose payments exceed 10 percent, 11 percent, and 12 percent of their total income, respectively.

HR 4283 provides increases in authorized funding levels for the Title III, IV, and V programs, and includes provisions that promote early awareness, outreach, and the dissemination of consumer information about postsecondary education. These provisions are in line with aspects of our state initiative in Texas called Closing the Gaps which includes regional training and outreach centers, a toll-free Texas Financial Aid Information Center information line — (888) 311-8881 — and a bilingual Internet web site (www.collegefortexans.com).

Other key provisions in HR 4283 are:

  • Making the Pell Grant Program available to students attending college year round. This is an important issue in Texas, as we try to enroll more students — particularly students from underrepresented populations — and, at the same time, identify ways to encourage students to complete their degree programs in four or five years. If enacted, this proposal will help this effort, as well as with persistence and graduation of students.
  • Repealing the provision that limits the amount of Pell Grant aid an eligible student attending low cost institution can receive and, inadvertently may act as an incentive for an institution to increase its cost of attendance.
  • Allowing a comprehensive income data match on student aid applications with tax data between the Department of Education and the Internal revenue Service (HR 3613 by Representative Sam Johnson, R-TX).
  • Lowering the student loan origination fee in both the FFELP and Direct Loan Program to 1 percent. It is time to begin phasing out this "temporary fee" established in a budget bill in 1981.
  • Establishing an interest-only, two-year repayment plan option for borrowers who may have difficulty in meeting their repayment obligations.
  • Renewing of the expired exemption of the 30-day delayed disbursement requirement and the multiple disbursement requirements for schools with a default rate of 10 percent or less for the last three fiscal years for which data are available.
  • Changing interest rates to provide a market-based variable interest rate for all Stafford, PLUS, and Consolidation loans. If this change is enacted, all borrowers will be treated equally — benefiting when interest rates are low and paying higher rates when rates increase to a potential maximum of 8.25 percent. The change for consolidation loans will also help to return the Consolidation Loan Program to its original intent when it was created by the Congress in the 1986. Increasing the annual subsidized Stafford loan limits for first- and second-year students in both the FFELP and Direct Loan Program.
  • Phasing out Section 413(D) Allocation of Funds formula for campus-based student financial aid programs. This statutory formula has been in place for 25 years and was last updated 10 years ago. Consequently, the formula allocates funds based, in large part, on when an institution began participating in one of the campus-based programs and in which state the institution is located. Population growth patterns and institutional missions are not considered.

The provisions in HR 4283 would gradually reduce the "base guarantee" protection currently granted to certain institutions, thus freeing up additional dollars to be distributed to all eligible institutions, ensuring that the allocations will be equitably distributed to the neediest students at all participating institutions across the nation.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100

 

© 2008 Texas Guaranteed Student Loan Corporation