March 3, 2005

• Texas Association of Student Financial Aid Administrators Issues Statement to the Texas Legislature

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Texas Association of Student Financial Aid Administrators Issues Statement to the Texas Legislature

In response to the initial recommendations for funding the state's student financial aid programs, TASFAA issued the following statement to the state legislature. In addition to communicating the statement to the entire membership, the statement is being personally delivered to select members and staff.

Improving Student Financial Aid in Texas:
Stretching Limited Resources

A Statement and Response from the Texas Association of Student Financial Aid Administrators concerning student financial proposals before the 79th Legislature, Regular Session

Preface
For several biennia, the Texas Legislature has made strides in providing programs and funds to help Texas students achieve the benefits of completing a college education. The Legislature's efforts have lead thousands of young people to attend college who otherwise would never have considered the prospect. Unfortunately, current economic trends threaten to hamper the progress the Legislature has made in this regard.

Recently, the initial draft of the FY 2006-2007 appropriations bill was filed as HB 1 and SB 1. Included in the bill are proposals that, essentially, hold level or reduce the state's student financial aid programs and begin, what appears to be, a phase out of the Towards EXcellence, Access and Success (TEXAS) Grant program and the expansion of the B-On-Time Loan program.

This Statement, offers the legislature our suggestions, as postsecondary student financial aid professionals, on ways to "stretch" an already inadequate amount of funding for student financial aid that will do the least harm to the fewest students. This, is also an expression of disappointment about the apparent plan to eliminate the principle need-based, grant program Texas has for needy students seeking a postsecondary education at public colleges and universities.

The TEXAS Grant program was a commitment made by the legislature to Texas' students and families in 1999. The commitment was met with full funding for the first three years of the programs' existence, reduced two years ago, and seems likely to be reduced further in HB 1 and SB 1.

This is particularly unfortunate considering the background of the Closing the Gaps initiative, the effort undertaken in 2001 to enroll 500,000 more students from Texas' underrepresented populations in postsecondary education by 2015. This effort was begun for two reasons. First, Texas is behind the national average in postsecondary education enrollment among underrepresented groups. Second, these groups now compose the majority of the state's population and will soon be the majority of the state's workforce.

This second fact will not change. Reducing the tools needed to enhance the participation of these groups in higher education provided just a few years ago to address this issue only forestalls the inevitable and worsens the situation.

This being said, we hope that the following will add some clarity and worthwhile ideas to the discussion.

Background
In 2003, the Texas Legislature directed the Texas Higher Education Coordinating Board (THECB) to collaborate with the Texas student financial aid community in a study to recommend improvements to the state's student financial aid programs and to submit recommendations to the 79th Legislature. The THECB met this directive using a committee of student financial aid professionals, the Texas Student Financial Aid Steering Committee.

The Steering Committee's report, Preparing for the Emerging Texas, contains a host of worthy recommendations. If adopted, these recommendations will improve the effective and efficient delivery of state financial aid to Texas postsecondary education students; simplify the administration of the state programs in tandem with the much larger federal student financial aid programs; and, perhaps most importantly, promote the Closing the Gaps initiative begun with such enthusiasm and drive five years ago.

Equally important, the report's recommendations create an effective mechanism for future changes to the state's student financial aid system that will enhance the legislature's ability to make informed policy decisions about student aid. TASFAA, therefore strongly recommends that the legislature continue this approach to examining and adjusting the state's student financial aid policy.

The Texas Association of Student Financial Aid Administrators
The Texas Association of Student Financial Aid Administrators (TASFAA), is a voluntary professional association whose membership includes student financial aid directors and professionals from virtually every postsecondary educational institution in Texas located in almost every legislative district.

TASFAA, among others, support the recommendations of the Steering Committee and the THECB, and encourages the legislature to enact those recommendations.

Essential Principles

TASFAA believes:

• No one should be denied the opportunity to obtain a postsecondary education because of a lack of financial resources;
• Texas should have a sufficiently funded, need-based student financial aid system that has a positive effect on the Closing the Gaps initiative;
• If state policymakers must balance the state's budget through reductions in appropriations, need-based postsecondary educational student financial aid should be the first priority in higher education funding; and
• State student financial aid programs should be fairly and consistently administered in concert with the bulk of student financial aid generated through federal programs.

Facts About Student Financial Aid in Texas
Each year, the Texas Guaranteed Student Loan Corporation (TG) publishes The State of Student Aid in Texas. It uses its own data and data from the College Board, the U.S. Department of Education, the Texas State Data Center, U.S. Census Bureau, the American Council on Education, the Texas Higher Education Coordinating Board, and the Independent Colleges and Universities of Texas. The Legislature should be aware of the following facts.

• While the percentage of high school graduates graduating with a Recommended Curriculum increased from 15 percent in 1999 to 64 percent in 2003, one-third of those who qualify for a TEXAS Grant do not receive them due to a lack of funds. (Page 42)
• The average cost of attending a public four-year university in Texas in 2004-2005 is $15,766 compared to $15,214 nationwide. (Page 24)
• 83 percent of the direct student financial aid available to Texas postsecondary education students is from federal programs compared to 70 percent nationwide. (Page 32)
• 62 percent of the direct student financial aid available to Texas postsecondary education students is in the form of student loans compared to 57 percent nationwide. (Page 33)
• 56 percent of the grant aid available to Texas postsecondary education students is from federal student financial aid programs. (Page 41)
• While state student grant aid has increased in Texas since 1999, Texas still lags behind other large states. Of the six largest states (California, Texas, New York, Florida, Illinois, and Pennsylvania), Texas is fifth in the amount of state grant aid made available to postsecondary education students. (Page 44)

In general, postsecondary education in Texas is no longer inexpensive. While Texas has made commendable progress toward closing the gaps, Texas still lags behind the nation and comparable states in providing financial access to postsecondary education.

The Current Circumstances
Because TASFAA fully understands the budget environment the 79th Legislature is facing and it believes the Legislature will search for ways to improve the efficient and/or effective use of current resources in lieu of increasing appropriations for programs, we preface the following recommendations with the following caveat.

In keeping with our Essential Principles, TASFAA encourages the Legislature to adopt the proposals included in Preparing for the Emerging Texas, as the legislative interim committee studies did. These proposals are "foundation" proposals, i.e., they will establish a simpler, standardized, state student financial aid system resulting in a less costly, more customer friendly, and more administratively efficient set of interrelated state programs than the current mix of programs with their varied, ad hoc eligibility requirements. Such an integrated foundation is important to the ultimate success of the Closing the Gaps initiative.

In keeping with the spirit, objectives and commitment of that initiative, TASFAA further encourages the Legislature to provide sufficient funds for the TEXAS Grant, Tuition Equalization Grant, and College Work-Study programs to honor the promises made to Texas students and families in 1999 and earlier. Our highest priority should be ensuring the social and economic well being of Texas that can be accomplished by producing a well educated population and workforce. Texas's future growth and prosperity depends upon financial access to higher education for underrepresented populations and all needy students. This is particularly essential as the Texas population shifts to a majority minority state.

Therefore, with the knowledge that the Legislature must live within existing budget parameters while doing the best it can to serve the needs of all Texans, TASFAA submits the recommendations below. We hope these recommendations will be balanced with those of the Texas Student Financial Aid Steering Committee and Coordinating Board and with the sentiments expressed here.

The ideas enumerated below vary in their impact and complexity and provide an array of options for the legislature to consider. Some options are simple and straightforward, such as limiting state grant aid to four years and enforcing a deadline for establishing eligibility. Other ideas are more complex, such as converting the TEXAS Grant and the B-On-Time programs to a TEXAS Grant/Be-On-Time 3+1 or 2+2 program. Ideas such as this do transform the original purpose of the current programs and may limit the effectiveness of these programs.

TASFAA will assist members of the Texas Legislature throughout the upcoming Regular Session and beyond. We look forward to lending our combined knowledge of state student financial aid administration and policy to the effort to enhance educational opportunities for Texans.

Recommendations:

A Financial Aid Model for Texas
Texas has the four core elements of a coordinated and successful student financial aid system in place. These should be enhanced with adequate funding. We discourage the elimination of these core programs and the addition of programs that will insert more complexity and inefficiency into the system. The core programs are:

• A very structured program to encourage high school students to adequately prepare for and enroll in college, i.e., the TEXAS Grant Program;
• Two flexible programs, the Texas Public Education Grant (TPEG) program and the Tuition Equalization Grant (TEG) program created to accomplish other goals and that supplement TEXAS grants for very needy students, serve other students who may not qualify for TEXAS grant due to age, type of high school attended, lack of program funds and other reasons;
• The Texas Work-Study Program to provide students with supportive work environments; and
• An array of loan programs that meet a variety of student needs.

Financial Aid Processes

• Give the THECB the authority to establish a statewide application deadline for state financial aid programs, giving institutions and financial and officers some ability to make exceptions for students in special circumstances; and
• Require students seeking TEXAS Grants to enroll in college no later that the first regular semester after high school graduation

The Duration of Eligibility for Texas Grant

• Reduce the number of years a student may receive a TEXAS grant to the number of years of the student's program of study; or
• Eliminate the 5 year/150 hour limit on TEXAS Grants in favor of a 4 year or two year limit (depending on institutional type) with exceptions for hardship, handicaps or academic program demands; or
• If an hour limit is maintained, include all hours attempted in the 150 hour limit; and
• Limit TEXAS Grant to students enrolled for, at least, 12 hours.

Program Changes

• If it is necessary to shift TEXAS Grant students into the B-On-Time program, make the shift after the students' third year of study, i.e., make the TEXAS Grant/B-On-Time a 3+1 program; and
• To minimize tax consequences for successful student, revise B-On-Time to operate more like a tuition rebate program or a tuition repayment program than a loan forgiveness program.

Measures to Mitigate Reduced Funding

• Allow the THECB to establish a cap on Expected Family Contribution (EFC) for students renewing TEXAS Grants;
• Use the funds set aside from tuition payments for B-On-Time to fund additional TEXAS Grants at institutions contributing the funds; or
• By rider to the appropriations bill, allow the Coordinating Board to make an across the board reduction to the maximum TEXAS Grant to stretch the TEXAS Grant resources.

TASFAA thanks the legislature for focusing on student financial aid as a priority during the past several Sessions and working to improve access to postsecondary education. We stand prepared to provide our collective expertise, input, support, and assistance to the legislature as it continues to address these crucial "closing the gaps" issues during these difficult times.

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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