College Tuition Deregulation Will Cost, Not Save, State More Money

The higher the tuition, the more financial aid the state must provide
January 20, 2004

Sen. Robert Duncan (R-Lubbock) raised some hard questions with college administrators this morning, laying out a case that the state's current system encourages colleges to raise tuition.

The topic of this morning's joint Interim Committee on Higher Education was planning for education beyond high school. During a question-and-answer session with college financial aid administrators, Duncan used a series of questions to make his argument that deregulating tuition did little more than put pressure on the state's financial aid programs.

First, Duncan asked whether federal financial aid was finite, which it obviously is. Then he made the point that increasing tuition meant students would be relying more heavily on the state's financial aid programs, in addition to federal aid, for those higher costs.

"The way I read this is, as the cost of tuition goes up, we are going to be draining - or putting pressure on - all systems of financial aid to make sure we cover the poorest," Duncan said. "Those in the middle class are going to be forced to take out the loans and incur the debt and enter the marketplace with debt."

That would mean a double whammy for most middle-income families, both going in and coming out of college. After some discussion, college administrators were forced to agree with Duncan that the state likely would pay for rising higher education costs.

And if the amount of state financial aid directed to each campus is indexed to the ability of students on each campus to pay tuition, Duncan continued, those campuses that raise tuition are more likely to see state financial aid money flow to their campuses.

"Is it going to be necessary for the state to subsidize these tuition increases by additional funding of programs such as Texas Grants and Texas Work Studies in order to allow students the same opportunities as they have today?" Duncan asked.

Sen. Royce West (D-Dallas), sitting alongside him, immediately said, "Yes." And after some discussion, even the college administrators had to admit Duncan was correct.

In other words, either the state subsidizes lower tuition so more students can afford to go to college or the state is forced to provide more financial aid to those students who can't afford tuition. It's a balance between the two ends of the equation, admitted Carol McDonald, president of the Independent Colleges and Universities of Texas.

Given those facts, Duncan said that Legislature does have some interest in "keeping an eye on tuition increases." The state provides no disincentive for universities to raise tuition. And, Duncan added, the state demands no accountability from colleges.

Financial aid officials painted a rosy picture of the availability of financial aid and student loans for all students, but lawmakers at the dais raised other concerns. Rep. Fred Hill (R-Richardson) said he and Sen. Steve Ogden (R-College Station) had met with 14 superintendents in the Bryan-College Station region. Not one of them had known what the Texas Grants program was, even though Texas A&M University had just returned $8 million to the state in unused financial aid.

College representatives said the program was still fairly new and that counselors, if not superintendents, were well aware of the program for additional state financial aid. Brown said it still showed a tremendous need for higher visibility.

"It has to start at the top," Brown said. "The superintendents are the CEOs of the school system. If the CEOs of the school systems don't know what this is, then we have a lot of problems."

(c) Copyright January 20, 2004 by Harvey Kronberg,, All rights are reserved