(Much) Higher Education

Does tuition deregulation mean that UT and A&M cost too much? It’s all a matter of degrees.

February 2005By Comments

GROWING UP AS ONE OF EIGHT KIDS in a Houston family of modest means, I came to realize that an article of faith in our household decreed that all of us would graduate from college. And so we did: seven from the University of Texas and one from Sam Houston State University. The credit for our perfect record is attributable not only to my parents’ esteem for education but also to the generosity of the State of Texas, which made it remarkably easy for students to finance their own education. Tuition was rock-bottom—$4 per semester hour, or $60 for a full-time class load in 1973, my freshman year—and I was able to work in a dormitory cafeteria, get low-interest loans and grants, and take ten years to pay off the debt. Without this help, I could never have gotten the kind of education I received at a major state university.

And so, two years ago, I watched with more than casual interest when the Legislature conferred the ability to raise tuition rates upon the various boards of regents for all state schools. Since then, in rapid succession, the UT regents have hiked tuition from $92 per semester hour ($1,380 for the standard load of fifteen hours) to $142 per semester hour. Similar increases have occurred at Texas Tech, Texas A&M, and the University of Houston, sending parents and students scrambling for part-time jobs, loans, and grants. Throw in fee increases, and the annual bill for the average UT student has risen to $6,786 for fourteen hours.

Students from wealthy families will still find UT and Texas A&M to be a bargain, and those from poor families can expect to receive financial aid. The big losers in tuition deregulation are middle-class kids, who will have to go into debt to afford the state’s best schools. UT financial aid director Larry Burt acknowledges that the Austin campus has seen “a slight downward trend”—from 32 to 28 percent since 1999—of new freshmen from families earning between $40,000 and $80,000 annually. “The costs used to be low enough it didn’t matter,” Burt says. “Now, because costs have gone up, a student has to think, ‘Do I want that particular college and the potential costs, or do I want to go to a different college?’”

UT chancellor Mark Yudof, a longtime champion of deregulation, believes that students ought to view any increased debt as an investment. “No one likes to borrow money, but if you are going to earn $1 million to $3 million more over your lifetime than you would without the degree, should you borrow $20,000 at three percent? I think so,” he says. “When you look at the rate of return on your education and you can take out a low-interest loan, there’s no businessperson in America who would turn down an investment opportunity like that.”

That’s easy to say, unless you’re a senior making minimum wage, like Marcella Colbert, at Texas A&M. She began school with enough scholarship money to make ends meet but now has incurred about $10,000 in debt because of rising costs. After working at a minimum-wage job, she became a Mary Kay cosmetics consultant. “I have friends who have no idea I sell Mary Kay. It is not something I would have done if I didn’t really need the money,” says Colbert, one of six kids of divorced parents. Juggling work, study, and extracurricular activities—she’s active in student government—can be demanding. Despite her best efforts to budget, she was caught off guard by an especially big book bill last semester, which wrecked her planning. “No one tells you how hard it is going to be,” she says.

Fellow Aggie Phil Shackelford has formed the Texas Coalition for Student Affairs (Colbert is a board member), which he hopes will lobby against more tuition increases: “What it comes down to is a tax increase. They wanted to pass it through the back door and make the universities responsible. We’re moving towards a class-based education.”

All this started when the Legislature faced a $10 billion budget shortfall in 2003. The Republican leadership chose to cut spending rather than raise taxes, paring higher education by $260 million. Then, at House Speaker Tom Craddick’s insistence, it permitted the universities’ boards of regents to set their schools’ tuition prices. Later, the state’s leadership would boast about passing a balanced budget, neglecting to mention the price: tuition hikes that would hit middle-class families hardest. Though efforts were made to bolster financial aid for needy kids, the increased costs quickly drained the state’s $100 million TEXAS Grant program, leaving an estimated 22,000 newly eligible students out in the cold.

State senator Eliot Shapleigh, a Democrat whose district includes UT–El Paso, where tuition has been raised 33 percent over the past two semesters, calls tuition hikes “the student tax.” Some Republicans share Shapleigh’s concern about the sizable increases. “What we’re doing is just shifting the burden,” acknowledges Senator Robert Duncan, of Lubbock. “We’re just funding higher education through another source.” The law permitting regents to increase tuition tries to soften the blow for low-income students by requiring that 20 percent of the increase be set aside for grants awarded on the basis of financial need. But, as Duncan notes, while rich families can absorb the tuition hikes easily and low-income students are awarded grants, it’s the middle-income kids who most likely will be forced to take out loans to stay in school.

While Duncan’s and Shapleigh’s laments resonate with someone like me, I realize that Texas’s artificially low tuition rates built inefficiency into the system. Under the old system, a billionaire’s kid and a pauper’s paid the exact same rate. And because it was so cheap to go to school, many students began taking up to six years to earn an undergraduate degree. Under the new law, regents can adopt “flat rate” tuition, which UT plans to do, encouraging students to take heavier course loads and graduate in four years. “We were in danger of becoming like the Russian grocery store,” says Yudof. “Artificially low prices but long lines and very little to serve.”

Thirty other states have deregulated tuition at their public institutions. Like Texas, many states adopted the new policy after years of declining appropriations. The Texas Legislature, which back in the seventies picked up three fourths of the cost of higher education, currently pays for less than 20 percent. In other states, the figure is even lower: Virginia and Michigan universities can count on public funds to provide a maximum of 10 percent of their budgets, and Texas is surely headed in that direction.

With regents controlling tuition, Texas, like most other states, is operating its colleges in a much more “entrepreneurial environment,” as Yudof describes it. “Instead of being run like the trucking industry in the fifties, with spheres of influence and public subsidies, you will have more competition. The idea is that universities will compete with each other for the best students and for the best faculty.”

Proponents of the new law argue that Texas needs first-tier research institutions to ensure the state’s economic future. Top research scientists bring with them federal grants, which in turn can be parlayed into successful commercial ventures. Handcuffed by diminishing legislative appropriations, UT-Austin has had problems competing with top schools like Stanford for cutting-edge faculty. “We were hard-pressed because of the competition,” says Yudof. “We have to pay full freight for a molecular biologist, because we can’t get first-rate people to work in second-rate laboratories.”

When UT raised tuition rates, it also put in place a financial aid plan that held “harmless” students whose families earn $40,000 or less each year and charged only a percentage of the increase to families who earned up to $80,000. In the UT System, 59 percent of the students receive grants and scholarships. Yudof talks about the “sticker price” differing from the actual cost of tuition for many students: Once grants, loans, and tax credits are counted, qualifying students pay far less than the posted price.

Reaction to the tuition hikes on campus has been surprisingly mild. The student body presidents of all UT campuses endorsed the increases; the UT System reported receiving only six negative letters from its 180,000 students and their families. And yet there’s plenty of evidence that Texas students are struggling financially through their college years. The Texas Higher Education Coordinating Board estimated last year that even before deregulation took effect, the average public college student borrowed $6,439 annually to cover tuition, books, and living expenses; the same study estimated that the average student taking five years to graduate from a public university would leave school with $27,275 in debt. That is a big hole for a new wage earner to climb out of.

The tuition deregulation bill received a lukewarm reception in 2003 until Craddick forced the issue through the House and then outlasted the Senate in budget negotiations at the end of the session. “The House wanted it and held the budget hostage until they got it,” says Senator Royce West, of Dallas, the chair of the Senate subcommittee on higher education. Lieutenant Governor David Dewhurst insisted on an additional $500 million in the budget for higher education in return for Senate acceptance of tuition deregulation. “I shudder to think how high the increases might have been without that $500 million,” West says.

Some senators are still angry. “The question becomes whether the boards of regents will listen to the Legislature anymore when it comes to tuition,” West says. It is only fair to say, however, that the Legislature did not listen to the universities’ pleas for more state support in recent years, which ultimately caused UT to decide that deregulation was the only alternative. “I loved the tradition [of low college costs], but the reality is this Legislature will not vote for Texas to strive for excellence,” says Democratic senator Judith Zaffirini, of Laredo. Republican senator Florence Shapiro, of Plano, echoes that theme: “We had a ten-billion-dollar shortfall. We didn’t have the money to fund them appropriately. We wanted these schools to be competitive and dollars were so scarce. It’s simple math.”

The result of college tuition deregulation may be that UT-Austin and Texas A&M evolve into first-class research institutions, but they will also be more elitist, catering to a wealthy student population and a smaller group of academically able low-income students. Texas college students in the middle, whose grades are good but not outstanding and whose parents’ income is a little too high for scholarship awards, will have to choose between going into debt or settling for something less than the best education the state has to offer. Yudof acknowledges that he worries about such outcomes, but he asks, “What is your alternative? What is your plan? If it’s to let the quality of higher education erode, then I am not on your bandwagon.”

Okay, here is my plan: responsible political stewardship. The state’s leaders and the Legislature are to blame for allowing the universities to pursue excellence on the backs of middle-class students. Tuition deregulation ended the longstanding tradition of affordable, excellent higher education for all Texans. If that’s not worth a tax increase, what is? But the politicians chose expediency over access to education. The consequence is that Texas’s best universities will have the money they need to offer a first-class education, but kids from families like the one I grew up in will not be able to afford it.

Related Content