Re-Regulate Tuition, Repeal Tuition “Set Asides”

February 12, 2021
TFR Staff
Dan Patrick, Higher Education, Tuition Deregulation

For most of Texas history, tuition rates at public colleges and universities were set by the Texas Legislature. That changed in 2003 when lawmakers “de-regulated” tuition and voted to give the state universities the ability to set their own rates, with proponents arguing increased competition between universities would result in better rates and returns for students.

Sadly, such “de-regulation” didn’t improve college affordability—it made it worse.

Once power shifted from electorally accountable lawmakers to unaccountable boards of regents, tuition levels shot up. Rather than reduce rates as hoped, public universities seized the opportunity to increase their budgets, more than doubling the cost of student tuition and fees in defiance of opposition from lawmakers who had been assured higher rates would not be the result of the transfer of authority.

In light of the poor results that tuition “de-regulation” has achieved, many lawmakers and citizens have been calling for reform. Leading voices such as Lt. Gov. Dan Patrick and State Sen. Charles Schwertner (R-Georgetown) have advocated that the legislature revoke universities’ ability to set their own rates. Meanwhile, they would freeze tuition at current rates.

However, simply re-regulating and freezing tuition is not enough, Texas lawmakers must also end the wealth redistribution scheme embedded in tuition in the form of set asides.

At the same time the Texas Legislature “deregulated” tuition for public universities in 2003, they also implemented a 15% tax on college students that subsidizes state-issued scholarships and financial aid programs for other students.

Repealing this law and removing the tax on tuition has been a major goal of the Young Conservatives of Texas, which has referred to the practice as “classic socialism” and “blatant redistribution of wealth.” YCT and many conservatives argue that reducing the cost of tuition by 20% would help college become more affordable for all Texans.

Lt. Gov. Dan Patrick agrees and has referred to the onerous set-aside program as “nothing more than a hidden tax on every student and every family when 15% of what they pay goes to another student.”

A longtime opponent of the program since his time in the Texas Senate, Patrick is expected to push for reform on the issue in the upcoming session— recently marking the issue as a top Senate priority.

Reform advocates can expect pushback from Democrats who favor wealth redistribution and the Republicans that enable them. Particularly strong opposition can be expected from State Sen. Judith Zaffirini (D–Laredo), who has praised the program and the scholarship programs that it funds.