So there’s a bit of a row in Austin these days, because our Lieutenant Governor Dan Patrick is proposing that the state do away with what are called tuition set-asides, meaning that by state law, roughly 15% of a student’s tuition is set aside for financial aid purposes.
Patrick’s contention is that it’s essentially a stealth tax on students who can afford to pay, and that the responsibility for funding these financial aid programs should be borne by the state as a whole, not disproportionately by students who may be struggling to fund their education, and who may have to borrow money to pay for this 15%, and presumably pay interest for decades on it.
The counter argument is basically that it’s been this way for a long time, other states do it, and that ultimately, if this method is taken away, it’s unlikely that the state will actually fund it, and that it’ll result in a de-facto defunding of financial aid for underprivileged students.
What do you think? This one’s a conundrum for me, in that I don’t want to defund student aid, but nor do I think it’s fair to expect the costs to be borne by other students, when it rightfully should be borne by the state.
The general principle that applies is that Dan Patrick is always wrong.
In this specific case, as you noted, the question is whether our Republican legislature would actually fund education properly if this were taken away. If someone addresses that first, then let’s have the discussion about the set-aside.
And I say this as someone who yesterday sent a large check to Texas A&M at the full rate.
I agree that Dan Patrick is generally an execrable idiot, and am routinely embarrassed by the garbage that spews from his (and Ken Paxton’s) mouth.
I’m not so sure it’s as simple as deciding that, and immediately tarring everything he says with that brush. For one thing, this isn’t chump change- this is on the order of $1000/ yr per student.
For example, at an average tuition rate of 273.43 per credit hour(taken by averaging the numbers here and dividing by 12 since they’re for a 12 credit hour semester) at A&M, I come out with a 130 credit hour degree costing $35545.90 in tuition alone, not including fees, housing, etc…
Some $5331.89 of that is set-aside money. If a student financed their education using 10 year student loans at an APR of 3.76%, that 5331,89 ends up costing $6405.12, with some $1073.23 of that in interest.
Is that fair? Why should students be required to pay an extra $5300 over the course of their education to subsidize others? I guess my issue is with who’s required to pay, and how much, not some kind of issue with financial aid. And the main root of the issue is that this set-aside disproportionately impacts the middle class and lower who are struggling with rising tuition costs as it is. I mean, an extra thousand dollars a year may not be too much for an upper-middle class family, but that could make or break a family lower on the scale. And for what? So someone even poorer can get a leg up? Seems like robbing Peter to pay Paul in a lot of ways.
Well said. I see the whole argument as akin to those who say “I don’t have children so why should I pay school taxes?” Because sometimes you have to pay for things that benefit the community as a whole. If you think it should be taken care of differently, find that solution FIRST as Curt says.
I wish we could televise a Dan Patrick/Rob Morrow debate. That would raise enough money to fund under-privileged students for years. Especially if the green slime from the Kid’s Choice awards was added. Comedy gold!
Interesting to see that no one has refuted this point. With the enormous college debts Dopers complain about, is there really a good reason for this? Do Texas students get to put it against tax as a charitable donation?
It would certainly gall me if I had $100K in debts of which $15K was a donation to someone else.
Lower and middle class students don’t pay full tuition almost anywhere. Usually because of grants, scholarships, and fed subsidies. At A&M, almost all the applicants found to have financial need received money. The average award was a little of $16k, and the average indebtedness of graduates was only $24k. I don’t think your point has much merit in the grand scheme of things.
I went to a private college in New York State about thirty years ago, and even then we were told that some percentage of our tuition (20%?) went to financial aid. It seemed to be an obvious cost shifting measure, so that those of us who got scholarships (about 33% in my case) were being subsidized by the others whose parents could afford to pay the whole amount out of pocket.
Similarly, hospital patients in the US with insurance or who are paying out-of-pocket subsidize the uninsured and uncollectable patients.
Every school effectively does this. This is why this complaint makes almost no sense.
The tuition at a school almost never pays the cost of educating a student. For example, Harvard spends around $84k per student per year. Cost of attendance is about $60k. The rest of the money is essentially a subsidy from rich, former students and the government. This is true at almost all schools. All students are not paying their own way per se.
One reason why stated tution costs have skyrocketed in the last few decades is because fewer people are actually paying that stated rate. At Harvard, 70% of students receive aid. Harvard is a fairly extreme example of this, but few schools have a majority of students paying the full, stated tuition. To quote an article using data from 2012:
Therefore, anyone who is paying full list price is effectively subsidizing poorer or smarter students. It doesn’t matter what you call it, or how you extract the money. Someone has to pay. More importantly, cost shifting is done in almost every industry with dynamic pricing.
If the opinion expressed in the OP is an accurate representation of Patrick’s expressed views, in particular “the responsibility for funding these financial aid programs should be borne by the state as a whole”, and Patrick is being sincere, then I actually agree with the position. If, in practice, everyone knows this will never be funded from the general fund and this is just an excuse to defund it I am not in favor.
This is essentially a 15% tax on tuition payments, set aside specifically for financial aid funding. I don’t see the point of tying specific funding sources to specific funding sinks. The legislature has decided that funding financial aid at a specific level is worthwhile? Sounds great! I’m all for it. Make sure you collect enough tax revenue to fund it and everything else and we’re done.
The details of that tax collection policy should be a separate issue. They’ve effectively made the decision that a 15% tax on tuition payments is better tax policy than the marginal increase in income or sales or whatever tax would be. Is it? And would they really have made that decision if they thought about it that way? If it is better tax policy, then just charge a 15% tax on tuition payments and stick that money in the general fund.
How about this… The set-aside money can be thought of as being put in escrow. If the student has to take on student loans and then cannot pay the loans back, the set-aside money can be applied to the loan. If the student doesn’t graduate, the money is put towards their loans. This way if the student is not successful with the educational opportunity, the set-aside tax is not an undue burden. It would also encourage the university to help the student succeed so that they don’t have to give the money back.
But that’s not the argument. It’s almost the exact flip side of it- it would be as if parents had to fund school districts by themselves, and childless people of whatever stripe were let off the hook.
Presumably having financial aid to underprivileged students benefits the state as a whole, so why have the fund-raising for that disproportionately impact other students, instead of the entire state?
What makes this different from the Harvard example is that it concerns state universities, not private ones. Presumably the entire state is subsidizing everyone’s education there to some degree. That’s where the problem comes in- this is disproportionately affecting students versus the rest of the state… in a largely state-funded enterprise.
And I really doubt that at the Texas state unversities, some 70% of students receive aid. Based on what I found, there’s some 61% who get some kind of aid, 52% of which is student loans (which don’t see this set-aside money). So that’s about 32% who get some kind of grant-based aid.
Which pretty much describes the entire college tuition situation these days. Everybody’s got their hand in someone else’s pocket, all so that students can overpay for well-hyped but generally second-rate (or worse) education. Rah, rah.
Well, I was looking at it from the view of “why do I have to pay for this child’s education who is not my child?”. In that case the set aside and the childless people paying school tax are in the same boat.
That’s pretty close, my son’s 15-credit-hour semester this fall resulted in a bill of $6520, of which I think about $250 was the football/basketball/baseball season ticket package, so that doesn’t count. However, this is the in-state rate, so is already discounted compared to the full price. I’m not sure how that fits in to Patrick’s 15% figure.
It also doesn’t include the price of room & board, which is something over $10,000 per year.