Austin (KXAN) — A unanimous vote by higher education leaders Tuesday means that tuition at the University of Texas at Austin will be effectively free for students whose annual household income less than $65,000. This move will also unlock dollars to offer tuition support for students from families with annual household incomes of under $125,000.
UT System Board of Regents established a $160 million endowment that will generate financial aid dollars starting in Fall 2020 for students at the system’s flagship school in Austin. The endowment will be drawn from the state’s Permanent University Fund which comes from longstanding management of state-owned land in West Texas which is leased out to oil and gas companies, funneling two-thirds of the profit into the UT System.
The goal of this move by the regents it to make higher education more attainable for middle and low-income students.
UT Austin offers automatic admission to applicants from Texas high schools graduating in the top 6% of their class. The university boasts “the highest academic rankings among public universities in Texas.”
How does it work?
In-state undergraduate students, including in-state transfer students, can qualify for this aid. The program does not require loans and students don’t have to pay back the funds.
Tuition and fees for students who qualify would be effectively free, but students must to apply in order to receive that benefit. How much aid you get depends on your annual household income or adjusted gross income (AGI). That’s the amount your household brings in after you take out taxes.
- Families that have a household income of up to $65,000 a year can have their tuition and fees completely covered.
- Families that have a household income of up to $125,000 per year will be assured some support with tuition.
How is this different from the past?
This change builds on the Texas Advance Commitment program which was launched in 2018 by UT Austin President Greg Fenves. The program allocates funds to students after federal and state grant aid are factored in.
Previously, these funds were used to cover the remaining costs of tuition for families with an annual household income of up to $30,000 and to cover part of the cost for students with annual household incomes between $30,000 and $100,000.
This past year was the first that the Texas Advance Commitment was in action and UT says more than 4,000 students benefited from it during that time.
The Texas Advance Commitment program is one of many financial aid options at UT Austin. In 2017-2018, UT Austin gave $164 million in aid to full-time, undergraduate, in-state students.
How many people will this endowment benefit?
UT notes that according to U.S. Census Bureau numbers, in 2017, the median household income in Texas was $59,206. So they estimate that this financial assistance could help cover the cost for many of those families.
UT Austin said that based on its 2018-2019 FAFSA numbers that 8,600 of its undergraduate students come from families that earn up to $65,000 and would be eligible for this aid. That’s 23.6% of the 36,457 students who are in-state and pursuing undergraduate degrees.
At present, UT Austin has 40,804 undergraduate students when you count both in-state and out of state students. Per state law, 90% of UT’s freshman admits are Texas residents.
UT Austin said based on 2018-2019 FAFSA numbers that an additional 5,700 students will qualify for tuition support through this endowment because they have household incomes of $125,000 or less.
Incoming UT Austin freshman Samantha Garza said of this new endowment, “I feel like it would make a really big difference, and especially, I come from Pharr, Texas which is south, south Texas in the Valley, and over there it’s really hard to leave for college and I feel like the financial situation is a really big factor.”
“So it would open up a lot of opportunities,” Garza said. “And I know there’s a lot of bright students, young, minds and if they had access to go to schools like UT they would just, you know, change the world.”
What is the cost of tuition?
According to calculations by the Texas Higher Education Coordinating Board, the average undergraduate in-state student at UT Austin pays $10,314 annually in tuition and fees. That amount can vary depending on what college you attend within UT Austin.
But those aren’t the only costs students face, UT estimates the following average costs for students each semester:
- Room and board for on or off-campus housing: $5,402
- Room and board for commuter students: $1,794
- Miscellaneous expenses $2,902
These additional costs would not be covered in the endowment.
What leaders in Texas higher education are saying
“I think everybody understands the affordability is an issue and we want to be accessible for students who may not be able to afford the tuition,” said UT Austin President Greg Fenves said Tuesday while speaking with reporters. He described the process of how this new endowment came about.
Back in 2016, Fenves committed $7.5 million a year to increase financial aid for middle-income students and in 2018 committed an additional $5 million. He explained that the more than 12 million dollars UT Austin had generated for financial aid through those efforts were not meeting the need of students, so he turned to the UT System for help.
“Today’s board action will create a new endowment that will create approximately 8 million a year of new money from this endowment that will be dedicated specifically to student financial aid,” Fenves said.
The PUF has been growing, which allowed more money to be available to send to UT Austin.
“It’s a combination of our accessibility and affordability and the growth of the PUF over the past ten years,” said President Fenves about how this new money for aid came about.
At the Regents meeting on Tuesday, the Executive Vice Chancellor for Business Affairs for The University of Texas System, Scott Kelley, said he is “very comfortable” that this new distribution of funds will not limit the sustainability of the PUF.
“Recognizing both the need for improved access to higher education and the high value of a UT Austin degree, we are dedicating a distribution from the Permanent University Fund to establish an endowment that will directly benefit students and make their degrees more affordable,” said Kevin Eltife, Chairman of the UT System Board of Regents.
“Chairman Eltife understands that college affordability is one of the most critical issues affecting all Texans,” UT Austin president Greg Fenves said. “Thanks to his leadership and the board’s action, this new endowment will go a long way toward making our university affordable for talented Texas students from every background and region.”
“There is no greater engine of social and economic mobility than a college degree, and this initiative ensures that more Texans will benefit from a high-quality UT Austin education,” said UT System Chancellor James B. Milliken.
Fenves said that UT Austin does not know yet if this new endowment will lead to an influx of applicants.
UT Austin officials say the new endowment will help to “maintain the university as one of the best values in Texas”, pointing to the 2018 Kiplinger rankings which place the school as the eighth-best value for public colleges in the nation.
KXAN’s Wes Rapaport contributed to this report.