A Review of State Grant Aid in Texas

Research Report

A Review of State Grant Aid in Texas

Abstract

Texas state grant aid programs provide significant support to many low- and moderate-income state residents pursuing postsecondary education. Only a small share of eligible students receives state grants, however, and students often cannot predict whether they will receive aid, especially if they apply to different types of institutions. Additionally, the share of tuition and fees that the largest state grant program covers fell from 100 percent in 2000 to 54 percent in 2019, increasing pressures on institutional aid funds. Though the state has a robust aid system that bases awards on students’ financial circumstances, there is room for improvement. Strengthening aid programs would help Texas increase educational attainment and reduce student debt.

Because grant awards are determined by schools rather than centrally, the share of eligible students receiving aid, the size of the awards, and the distribution of aid across income and demographic groups varies across institutions. In addition, because funding is too low for all eligible students to receive a grant, each of the three major state grant programs—Toward EXcellence, Access, and Success (TEXAS), the Texas Educational Opportunity Grant (TEOG), and the Texas Equalization Grant (TEG)—serve only a fraction of eligible students. Moreover, many students are excluded because of priority academic requirements or other criteria for determining award allocation. In addition to providing grant programs with more funding, the following actions would give more eligible students aid:

  • Improve the allocation of state aid funds to institutions. With its current decentralized financial aid system, Texas should ensure that the allocation of grant funds to individual institutions is distributed equitably and based on students’ financial circumstances.
  • Provide greater access for independent and transfer students. Allocate more state grant aid for older students and those who transfer from two-year to four-year institutions.
  • Review grant program satisfactory academic progress requirements. Align academic requirements for continuing eligibility for state grant aid with federal aid requirements.
  • Reconsider the requirement to cover tuition and fees with grant aid for state aid recipients. This requirement for TEXAS grant and TEOG recipients makes it difficult for institutions to maintain practices that ensure that students with lower ability to pay will receive more grant aid.
  • Gather further evidence on academic priority rules. These might prevent many students with significant need who are academically qualified to enroll in college but do not meet these high standards from receiving aid.
  • Retain tuition set-aside programs. Texas state law requires public institutions to set aside a portion of tuition revenues for financial aid. These programs are critical to the success of the state’s student aid system and should be maintained.

Texas has a strong state grant aid program but does not serve as many low- and moderate-income students as it could. Reviewing and modifying certain program elements could improve outcomes and create a more efficient and accessible system.

 

This report was corrected on June 14, 2021, to indicate, on page 7, that the “formula for allocating funds to institutions does not look transparent or consistent to stakeholders.” A previous version said the formula did look transparent or consistent.

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