Sandra Steele, Educational Consultant

No Agreement on Future of College Financial Aid
House, Senate yet to settle differences on loans, grants, stiffer rules

-- Ralph K. M. Haurwitz, American-Statesman

Saturday, April 16, 2005

A consensus on reshaping the state's financial aid programs for college students is proving elusive for the Texas Legislature.

Among the unresolved questions: How much money should be allocated for grant aid, which does not have to be paid back, and how much for loans? Should aid recipients be required to take heavier course loads? Should they have to graduate in four years?

The outcome of the debate could affect the financial aid prospects and college plans of thousands of students.

At this point, only one thing is clear: There is almost no chance that lawmakers will dramatically increase the state's overall outlay for financial aid, even though the state's higher education plan, adopted in 2000 and occasionally tweaked, calls for just that.

The state currently provides only about one-tenth of all financial aid available for higher education in Texas. The federal government contributes three-fourths, with individual colleges, private donors and other sources supplying the balance.

The state's share is nonetheless crucial for many students from low-income families, and so the sums and the strings attached to them are the subject of considerable debate.

The appropriations bills approved in recent weeks by the Senate and House reveal stark differences in thinking.

The Senate would trim grant aid and boost loan aid. That comes as no surprise. The state's loan program, called B-On-Time, was launched two years ago at the behest of Lt. Gov. David Dewhurst, who presides over the Senate.

Under B-On-Time, students do not have to pay back the zero-interest loans if they graduate in four years with at least a B average. However, such forgiven loans must be counted as income on federal tax returns.

Not all senators are thrilled with Dewhurst's fondness for loans with strings attached. The leading proponent of grants has been Sen. Rodney Ellis, D-Houston, who wrote the legislation creating the state's main grant initiative in 1999, the TEXAS Grant program. Ellis' office has churned out paperwork showing that Texas provides the least financial aid of the six most populous states.

Ellis appears to have some allies in the House, at least insofar as the balance between grants and loans is concerned. That chamber's two-year state budget would authorize $10 million for B-On-Time loans, a fraction of the Senate's $88 million allocation.

The House wants to spend $322 million on TEXAS Grants, while the Senate bill calls for $294 million. Neither chamber's bill comes close to meeting the need of eligible students under the TEXAS Grant program as calculated by the state Higher Education Coordinating Board: $524 million.

Differences between the House and Senate bills will have to be resolved by a conference committee made up of members from both chambers.

It is also unclear what additional strings, if any, will be attached to financial aid. A number of lawmakers — including Sens. Florence Shapiro, R-Plano, and Judith Zaffirini, D-Laredo — see such strings as instruments to speed up students' progress to graduation.

Gov. Rick Perry is sympathetic to such concerns as well. Earlier this year, he proposed combining the TEXAS Grant and the B-On-Time loan programs so that, in most cases, students would receive grants during their first two years of college and loans during the second two years. That would impose the loan program's stricter requirements on thousands of additional students. But legislation to accomplish Perry's recommendation appears to be stalled in a House committee.

Other bills would require students receiving TEXAS Grant aid to take a full course load of 15 credits a semester. Currently, only about one in four students receiving such aid carry that many credits; the minimum requirement is nine credits.

But there is a risk to adding a 15-credit rule: It could turn away the very students whom the state's higher education plan identified as underrepresented in colleges — those who are black, Hispanic or low-income. Many such students work while attending school and find it difficult to carry sufficient credits to graduate in four years.

Pressure to graduate in four years also could make students reluctant to switch majors when their interests change.

"Lives change once you get to college. It's unrealistic to tell someone their mind can't," said Veronica Castro, a TEXAS Grant recipient at the University of Texas who switched from biology to human development and family science and is on track to graduate in five years.

One compromise under discussion would require TEXAS Grant aid recipients to take at least 12 credits per semester.

"There's clear movement in that direction," said Ellis, after meeting this week with some of his Senate colleagues and Dewhurst.

Rep. Dan Branch, R-Dallas, a member of the House appropriations subcommittee on higher education, occupies something of a middle ground on various financial aid issues. Like many of his House colleagues, he regards the TEXAS Grants as a higher priority for funding than B-On-Time loans. He would like to allocate more than the House bill provides for the grants but says that is not realistic given the state's tight fiscal situation and a broad consensus that public education, not higher education, is the top priority.

At the same time, Branch said, it is important to raise graduation rates, thereby freeing up seats in universities for additional students and making financial aid available to new students.

"How do you allow for the person who really needs to work versus the person who's just taking a longer route because they enjoy spending more time in school?" Branch said. "These bills are reflecting that tension and trying to encourage quicker graduation times."