U' T' System Public Affairs Update for Chairman Miller

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(No Transcript)
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Purpose

• To review the distributional impact of tuition
  and financial aid by income level.
• To model the cost implications of a
  hold-harmless tuition policy for low-income
  students.

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Summary

• Our findings indicate that typically, grants and
  scholarships cover 100 of tuition for students
  from families with incomes below 40,000.
• When federal tax benefits are included in the
  analysis, a significant portion of tuition is
  being offset at even higher income levels.

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Campus Context and Background
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Cohort Institutions

• For all academic campuses, our review focused
  on
• Full-time (academic year 2001-2002)
• Undergraduate
• Texas resident
• Need-based financial aid
• Todays presentation will include
• U.T. Austin
• U.T. Dallas
• U.T. Pan American

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Student Profile Summary
35,497 6,969 13,361
28,930 3,008 5,754
16,490 2,128 4,627
11,052 1,251
4,391 Dependent students only
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Student Profile
Percentage of Students
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Student Profile
Percentage of Student Population Receiving
Need-Based Financial Aid by Family Income
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Campus ProfileAvg. Tuition and Other Costs
16,200
15,580
14,584
11,244
5,340
5,340
3,854
2,562
(includes room board, books, etc.)
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Distribution and Impact of Tuition by Income
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Distribution of Grants and Scholarships
U.T. Austin Continuing Undergraduates
Avg. Total Costs 16,200
Avg. Tuition and Req. Fees 5,340
Family Income
Family Income
Average Other Costs
Average Grant/Scholarship
Average Tuition and Required Fees
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Distribution of Grants and Scholarships
U.T. Austin Freshmen
Avg. Total Costs 15,920
Avg. Tuition and Req. Fees 5,340
Family Income
Family Income
Average Other Costs
Average Grant/Scholarship
Average Tuition and Required Fees
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Distribution of Grants and Scholarships
U.T. Dallas
Avg. Total Costs 14,581
Avg. Tuition and Req. Fees 3,854
Family Income
Family Income
Average Other Costs
Average Grant/Scholarship
Average Tuition and Required Fees
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Distribution of Grants and Scholarships
U.T. Pan American
Avg. Total Costs 11,244
Avg. Tuition and Req. Fees 2,562
Family Income
Average Other Costs
Average Grant/Scholarship
Average Tuition and Required Fees
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Average Grant and Scholarship Award by Income
Level
Family Income
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Federal Income Tax IncentivesFor Higher
Education Expenses

• Hope Scholarship Tax Credit
• Freshman and sophomores
• 100 of the first 1,000 of qualified tuition
  expense and 50 of the second 1,000 (maximum
  1,500 per year)
• Gradual phase-out for joint filers with incomes
  between 80K 100K
• Lifetime Learning Tax Credit
• Juniors, seniors, part-time, and graduate
• 20 of the first 5,000 of qualified tuition
  expenses (maximum 1,000 per year)
• Gradual phase-out for joint filers with incomes
  between 80K 100K

continued
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Federal Income Tax IncentivesFor Higher
Education Expenses

• Higher Education Expense Deduction
• Out-of-pocket tuition and related expenses
• 2002/2003 up to 3,000 for joint filers with
  incomes up to 130K
• 2004/2005
• up to 4,000 for joint filers with incomes up to
  130K
• up to 2,000 for joint filers with incomes
  between 130K 160K
• Note These tax benefits are mutually exclusive.
  No double benefit allowed.

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Distribution of Grants, Scholarships, and Tax
Benefits
U.T. Austin Continuing Undergraduates
Avg. Total Costs 16,200
Avg. Tuition and Req. Fees 5,340
Family Income
Family Income
Avg. Tuition and Req. Fees
Average Other Costs
Average Grant/Scholarship
Tax Benefit (1,000 max)
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Distribution of Grants, Scholarships, and Tax
Benefits
U.T. Austin Freshmen
Avg. Total Costs 15,920
Avg. Tuition and Req. Fees 5,340
Family Income
Family Income
Avg. Tuition and Req. Fees
Average Other Costs
Average Grant/Scholarship
Tax Benefit (1,500 max)
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Distribution of Grants, Scholarships, and Tax
Benefits
U.T. Dallas
Avg. Total Costs 14,581
Avg. Tuition and Req. Fees 3,854
Family Income
Family Income
Avg. Tuition and Req. Fees
Average Other Costs
Average Grant/Scholarship
Tax Benefit
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Distribution of Grants, Scholarships, and Tax
Benefits
U.T. Pan American
Avg. Total Costs 11,244
Avg. Tuition and Req. Fees 2,562
Family Income
Avg. Tuition and Req. Fees
Average Other Costs
Average Grant/Scholarship
Tax Benefit
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Hold Harmless Analysis
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Two-Part Proposal

• A guarantee that any full-time Texas resident
  undergraduate student with a family income below
  the state median who applies for financial aid
  will receive grant/scholarship aid to cover the
  cost of tuition and required fees.
• Currently enrolled students will be held harmless
  for any tuition and required fee increases (i.e.
  they will receive grant/scholarship aid to
  completely offset any proposed tuition increase).

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Hold Harmless
Tuition
Tuition
Grant/Scholarship
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Hold Harmless
Proposed Tuition
Tuition
Tuition
Grant/Scholarship
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Increase in Grant Aid Required to Hold Harmless
(less than 40K family income)
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Additional Costs Associated with Tuition
Increases
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TEXAS Grant Program

• Tuition and fees provided by TEXAS Grants are
  based on the average tuition and mandatory fees
  charged at 34 public colleges and universities.
  Universities charging tuition in excess of the
  state average are expected to cover the
  difference. Thus, any increase in tuition only
  marginally changes the state average and requires
  the campus to match most of the increase. For
  example

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801
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778
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Increase in Grant Aid Required to Match TEXAS
Grant (for family incomes greater than 40K)
Note U.T. Pan American is not included because
its tuition is below the state average.
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Total Increase in Grant Aid Required to Hold
Harmless and Match TEXAS Grant
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Approximate Percentage of Tuition Revenue
Necessary to Hold Harmless and Match Texas Grant
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Policy Questions And Next Steps
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Next Steps

• Compile and review data for other academic
  campuses.
• Should we include undergraduates at the health
  science centers?

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Policy Questions

• Is this the appropriate strategy?
• Should the campuses have the flexibility to
  tailor this policy to best meet the needs of
  their students?
• Have we targeted the right group (full-time
  resident undergraduates with family incomes below
  the state median)?
• Should there be a time frame for eligibility for
  the guarantee?