State of Student Aid in Texas – 2022

Section 13: Texas Higher Education and Student Debt Policy

<< BACK TO MAIN PAGE

Progress on 60x30TX Goals

In 2016, the Texas Higher Education Coordinating Board (THECB) launched a new, 15-year strategic plan for Texas higher education: 60x30TX (“sixty by thirty Texas”). The plan establishes four core goals:

  1. By 2030, at least 60 percent of Texans ages 25-34 will have a postsecondary credential or degree.
  2. By 2030, at least 550,000 students in that year will complete a certificate, associate, bachelor’s, or master’s degree from a Texas public, independent, or for-profit college or university.
  3. By 2030, all graduates from Texas public institutions of higher education will have completed programs with identified marketable skills.
  4. By 2030, undergraduate student loan debt will not exceed 60 percent of first-year wage for graduates of Texas public institutions.

In focusing on student debt and workforce outcomes, goals three and four represented a new direction for the THECB. The plan identified two key targets for containing student loan debt:

  1. Decrease the excess semester credit hours (SCH) that students attempt when completing an associate or bachelor’s degree to 12 by 2020, six by 2025, and three by 2030.
  2. Limit the need to borrow so that no more than half of all students who earn an undergraduate degree or certificate will have debt in 2030.

While meeting the target for excess SCH will require substantial reductions, about 60 percent of undergraduate degree completers already borrow student loans. This is partially because students with a greater need to borrow tend to have lower odds of completing their degrees; students with more resources who do not need to borrow are overrepresented among completers. Without significant changes to students’ costs and/or resources, increasing the number of minority and low-income students who graduate (an explicit goal of 60×30) will raise the percentage of graduates who borrow. Conversely, if grant funding does not increase significantly, then increasing the rate and amount of borrowing might be necessary for financially needy students who would otherwise drop out to persist to graduation. At current prices, making progress towards completion goals while holding the borrowing rate at 60 percent and containing the debt burdens of graduates will likely require additional grant funding.

60x30TX Goal Updates

2015 (Baseline) 2020 2030 Goal
Overall Attainment Rate 40.3% 45.3% 60%
Completion Goals Overall Completion Total 311,340 348,394 550,000
Hispanic Completion 96,657 125,151 285,000
African American Completion 38,964 41,265 76,000
Male Completion 131,037 143,471 275,000
Economically Disadvantaged Completion 114,176 128,983 246,000
Texas High School Graduates Enrolling in Texas Higher Education 52.7% 44.9% 65%
Marketable Skills Goal Working or Enrolled Within One Year 78.9% 79.0% 80%
Student Debt Goals Student Loan Debt to First-Year-Wage Percentage 60% 51% 60%
Excess SCH Attempted 19 14 3
Percent of Undergraduates Completing with Debt 49.2% 44.1% 50%

Sources: Texas Higher Education Coordinating Board. THECB 60×30 Progress Report, July 2021 (https://reportcenter.highered.texas.gov/reports/data/60x30tx-progress-report-july-2021/).

Higher Education Highlights from the 87th Legislative Session

The 87th Texas Legislature was in session from January 12, 2021 to May, 31, 2021. A number of bills related to higher education were ultimately passed into law, including the General Appropriations Act for Fiscal Years 2022-2023 that contains funding for higher education. Below are some of the higher education-related bills:

SB 1860: Relating to Creating an Electronic Application System for State Student Financial Assistance

  • Requires the Texas Higher Education Coordinating Board to develop a process by the 2023-2024 school year that would allow students to complete the Texas Application for State Financial Aid online on the same website as the common admission application form

SB 1888: Relating to the Establishment of Certain Programs to Facilitate Early High School Graduation and Enrollment at Public Institutions of Higher Education

  • Establishes the Texas First Early High School Completion Program and the Texas First Scholarship, which allows public high school students who demonstrate early college readiness to graduate early from high school and receive financial aid
  • Establishes eligibility requirements for the scholarship program and requires the Texas Higher Education Coordinating Board to establish standards for determining early readiness for college

HB 3767: Relating to Measures to Support Workforce Development in the State, Including the Establishment of the Tri-Agency Workforce Initiative and Additional Employer Workforce Data Reporting

  • Requires the Texas Workforce Commission, Texas Education Agency, and the Texas Higher Education Coordinating Board to create interagency agreements to share, match, and manage education and workforce data and coordinate resources
  • Requires the three agencies to regularly update a list of career pathways based on current needs and forecasted demands, in consultation with employers
Sources: Texas Higher Education Coordinating Board (THECB), Legislative and Media Resources, Higher Education Policy and Appropriations, “Summary of Higher Education Legislation, 87th Texas Legislature” (2021) (https://reportcenter.highered.texas.gov/training-materials/presentations/summary-of-higher-education-legislation-87r/).

Funding for TEXAS Grant, TEOG, and TEG Increase for the 2022-2023 Biennium

The 87th Texas Legislature passed Senate Bill 1, the General Appropriations Act for Fiscal Years 2022-2023, and House Bill 2, a supplemental appropriations bill. These bills appropriated funding for the state fiscal years* 2022 and 2023 for, among other things, state higher education grant programs. Overall, appropriations for higher education increased by 2.2 percent ($352.5 million) between the 2020-21 biennium and the 2022-23 biennium.

Funding for Texas’ largest state grant program, the Towards Excellence Access and Success (TEXAS) grant, was increased by $83.7 million between the 2020-21 biennium and the 2022-23 biennium. Funding for the Texas Educational Opportunity Grant (TEOG), Tuition Equalization Grant (TEG), and the Graduate Medical Education Expansion was also increased. The senate bill provided an additional $110 million for TEXAS grants, TEOG, and TEG in order to maintain the same percentage of eligible students served. This additional funding has been included in the 2022-23 biennium amounts listed in the table above.

All state grant programs assist students with financial need, promoting access to higher education to low-income students while helping to limit their need to borrow student loans, though some programs (like the TEXAS Grant) also have an explicit merit-based component.

Major Texas Financial Aid Programs, Appropriated Funds by State Program and State Fiscal Year*

2020-2021 Biennium 2022-2023 Biennium
Towards EXcellence Access and Success (TEXAS) Grant $866.4 $950.1
Texas Educational Opportunity Grant (TEOG) $96.0 $105.2
Tuition Equalization Grant (TEG) $178.6 $195.8
Graduate Medical Education Expansion $157.2 $199.1
Nursing Shortage Reduction Program $19.9 $18.9

* The Texas state fiscal year is September 1 through August 31.
Sources: Legislative Budget Board, State Budget by Program “87th Regular Session, Final Bill” (http://sbp.lbb.state.tx.us/).

Student Loan Debt in Texas Grows Faster Than the U.S.; Reaches $125 Billion

Rising national student loan debt has garnered much attention for several years. As of December 31, 2021, the total volume of outstanding student loan debt in the United States was estimated at $1.57 trillion, representing an increase of about $20 billion over the previous year. As of the end of 2021, the estimated outstanding student loan volume in Texas was about $125 billion, up about 4.5 percent from the previous year compared to 1.3 percent growth nationally. Because the growth rate of Texas student loan debt exceeds the rate for the U.S. as a whole, the proportion of all student loan debt held by Texans has increased. In 2009, Texans held about 6.6 percent of U.S. student loan debt; in 2021, Texans held about 7.9 percent. The relative youth of the Texas population is likely a major contributor to the growth in student loan debt relative to the nation.

While the growth rate of Texas student loan debt exceeds the overall U.S. growth rate, both rates have slowed somewhat in recent years. Texas has added about $5 billion per year in outstanding student loan debt since 2018, resulting in higher absolute growth but lower percentage growth than in previous years. For the U.S., absolute debt growth of about $50 billion annually since FY 2018 (and only $20 billion from 2020 to 2021) has been smaller than usual, such that the annual percentage growth has declined even more quickly.

At the state and national level, the majority of the outstanding student loan debt comes from federal loans, including Federal Family Education Loans (FFEL)**, Federal Direct Loans, and Federal Perkins Loans. Private and state-level education loans, which generally do not provide accommodations like income-linked repayment plans, deferments, or forgiveness, accounted for about 12 percent of student loans borrowed in AY 2020-21.

Estimated Outanding Student Debt in Texas (in billions*)

Estimated Outanding Student Debt in Texas (in billions*)

* Estimates are based on state-level per capita student debt averages from the Federal Reserve Bank of New York Consumer Credit Panel, which excludes persons without credit reports and persons living in counties where fewer than 10,000 people have credit reports. The result for a given year is adjusted by the same factor by which the result of this methodology for the United States as a whole deviates from the United States total outstanding student debt for that year as reported in the Quarterly Report on Household Debt and Credit. This adjustment, which was not made in some previous editions of SOSA, has been applied to all years.
** The FFEL Program ended in 2010, but borrowers are still making payments on outstanding FFEL balances.
Sources: U.S. Student Loan Debt Estimate: Federal Reserve Bank of New York (FRBNY), Quarterly Report on Household Debt and Credit, 2021:Q4 (https://www.newyorkfed.org/microeconomics/hhdc/background.html), Texas Student Loan Debt Estimate: FRBNY, Household Debt and Credit Statistics by State (https://www.newyorkfed.org/microeconomics/databank.html); Non-federal borrowing: College Board. Trends in Student Aid 2021 (https://trends.collegeboard.org/student-aid/figures-tables/total-federal-and-nonfederal-loans-over-time).

A Majority of Federal Public Service Loan Forgiveness Applications Have Been Processed and Approved

The Public Service Loan Forgiveness Program (PSLF) cancels the remaining balance of Federal Direct Loans for borrowers who have made 120 qualifying monthly payments while working full-time for certain government and non-profit employers. Qualifying payments must meet several eligibility criteria, including being made in full, within 15 days of the due date, and under an income-driven repayment (IDR) plan. PSLF first became available in 2007, and borrowers could (theoretically) have achieved 120 qualifying payments beginning in October 2017.

PSLF has undergone temporary changes as a result of the COVID-19 pandemic. The Department of Education issued a limited waiver, good through the end of October 2022, that meant a broader range of past payments on loans would count toward those 120 qualifying payments, so long as the payments were made while working for a qualified employer, and that borrowers could qualify for the program no matter what repayment plan they were signed up for. Additionally, the Department of Education placed nearly all active federal student loans into automatic forbearance, meaning that borrowers were not required to make payments while in that status. For those who were working for qualified employers during an automatic forbearance, each month still counts toward the 120 qualifying payments, even if the borrower wasn’t making a payment. These changes mean that many more borrowers will be able to benefit from the forgiveness program, and the Department of Education has strongly encouraged borrowers to sign up by submitting a form.

Sixty percent of the 1,684,233 submitted PSLF forms were complete and processed as of June 2022. Of those complete and processed forms, 99 percent were determined to have met employment certification requirements, meaning that the borrower had qualifying payments that will count toward PSLF progress. Among the one percent of forms that did not meet employment certification requirements, 83 percent of them were not approved because the loans were not in the Direct Loan program. Nine percent had Direct Loans, but the employer is not eligible, and seven percent had Direct Loans and an eligible employer, but had errors with their employment dates. Only one percent of forms had loans in an ineligible status, such as default. This is likely to change in future years as the repayment pause ends and borrowers enter repayment again.

Reasons PSLF Applications Did Not Meet Employment Certification Requirements

Reasons PSLF Applications Did Not Meet Employment Certification Requirements

* Borrowers were able to submit employment certification data for student loans that were not Direct Loans. The loans would still need to be consolidated into the Direct Loan Program in order to benefit from PSLF. After consolidation, the borrower’s submitted form will be reevaluated to apply any earned PSLF credit.
Sources: U.S. Department of Education, Federal Student Aid, Public Service Loan Forgiveness Data: https://studentaid.gov/data-center/student/loan-forgiveness/pslf-data; U.S. House Committee of Education and the Workforce, PROSPER Act: https://www.congress.gov/bill/115th-congress/house-bill/4508.

Legislation Brings Big Changes to FAFSA, Need Analysis, and Access to Federal Aid

The FAFSA Simplification Act was passed in December 2020 as part of the Consolidated Appropriations Act of 2021. This legislation included many changes to the need analysis calculations, to access to federal aid, and to the Free Application for Federal Student Aid (FAFSA) form, in addition to many other changes. The changes are being made in a phased approach, but all changes will need to be made by July 1, 2024

Replacing Expected Family Contribution (EFC) with Student Aid Index (SAI)

  • The SAI is a similar calculation as was used for EFC, but there are some changes. The lowest EFC possible was zero dollars while the SAI can go as low as negative $1,500.
  • The SAI will account for only family size instead of both family size and number in college.

Expanding Access to Federal Aid

  • Federal Pell Grant access will expand to more students and link eligibility to family size and the federal poverty level.
  • Incarcerated students and students whose school closed while they were enrolled will regain Pell Grant eligibility.
  • The lifetime limit on the period that a borrower can receive subsidized loans will be lifted.

FAFSA Simplification

  • Federal Student Aid is required to use as much data as possible directly from the Internal Revenue Service to calculate Federal Pell Grant eligibility and the SAI.
  • Questions about Selective Service registration and drug convictions have been removed from the FAFSA form, and questions about sex and race/ethnicity have been added.

Sources: U.S. Department of Education, Federal Student Aid, Beginning Phased Implementation of the FAFSA Simplification Act (EA ID: GENERAL-21-39) (https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-06-11/beginning-phased-implementation-fafsa-simplification-act-ea-id-general-21-39); NASFAA, NASFAA Deep Dive: Changes to Federal Methodology, Other Student Aid Changes From Spending Bill (https://www.nasfaa.org/news-item/24269/NASFAA_Deep-Dive_Changes_to_Federal_Methodology_Other_Student_Aid_Changes_From_Spending_Bill); NASFAA, FY 2022 Spending Bill Includes Clarifications, Improvements to FAFSA Simplification Act (https://www.nasfaa.org/news-item/26984/FY_2022_Spending_Bill_Includes_Clarifications_Improvements_to_FAFSA_Simplification_Act).

Student Loan Repayment Pause Repeatedly Extended As the COVID-19 Pandemic Continues

Since March 2020, student loan borrowers who were in repayment have not been required to make payments on their student loans. The student loans were placed into automatic forbearance with a zero percent interest rate, so in addition to payments not being required, there will be no accumulation of interest during the payment pause as well. This pause on payments was put in place to provide some relief on financial pressures experienced due to the COVID-19 pandemic.

The initial payment pause was set to expire after 60 days, but just a week later was extended through the end of September 2020 as one of the provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The pause has since been continuously extended, meaning that borrowers have not been required to make a student loan payment for more than two years. The current pause expires on December 31, 2022, with loan repayments resuming on January 1, 2023.

Repayment Extension
March 20, 2020 Loan payments are suspended. Collections on defaulted loans are stopped. Loans are put into automatic forbearance and interest rates are set to zero percent. Was originally intended to last for 60 days.
March 27, 2020 The CARES Act extended the payment pause through September 30, 2020 and continued the zero percent interest rate.
August 8, 2020 The Department of Education is ordered to extend the student loan relief policies in the CARES Act through the end of the calendar year (December 31, 2020).
December 4, 2020 The payment pause is extended through the end of January 2021.
January 20, 2021 The payment pause is extended through the end of September 2021.
August 6, 2021 The payment pause is extended through the end of January 2022, referred to at the time as a final extension.
December 22, 2021 The payment pause is extended another 90 days through May 1, 2022.
April 6, 2022 The payment pause is extended another 120 days through the end of August, 2022.
August 24, 2022 The payment pause is extended through the end of the year (December 31, 2022), along with an announcement of debt cancellation for some borrowers.

Sources: U.S. Department of Education, Federal Student Aid, COVID-19 Emergency Relief and Federal Student Aid (https://studentaid.gov/announcements-events/covid-19).

COVID-19 Legislation Aims to Help Higher Education Institutions and Students

In response to the COVID-19 pandemic, and the resulting economic crisis, the U.S. Congress passed two major pieces of relief legislation – the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 and the Consolidated Appropriations Act of 2021 in December of 2020. Both bills provided significant funding and some programmatic changes to help students and colleges weather the pandemic. The CARES Act authorized about $14 billion to higher education via an Emergency Stabilization Fund. Half of that fund is to be used for emergency grants to students for expenses related to campus disruptions due to the COVID-19 pandemic, such as food, housing, technology, health care, and childcare. The other half can be used by institutions for crisis-related expenses, such as lost revenue, technology costs associated with transitioning to remote learning, and payroll. A total of $1.02 billion in relief aid was allocated to Texas higher education with the amount evenly divided between student aid and institutional assistance.

Additionally, the CARES Act allowed student loan borrowers whose loans were held by the U.S. Department of Education to take a six-month break from making payments. Interest will be waived during that time period and loan collectors will be prevented from garnishing wages, tax returns, and Social Security benefits to collect overdue payments. The suspension of student loan payments was later extended to September 30, 2021 via executive memorandum.

The Consolidated Appropriations Act will deliver $23 billion in aid to higher education throughout the country. The bill also authorizes the simplification of the Free Application for Federal Student Aid (FAFSA) which reduced the number of questions from 108 to 36, allows more incarcerated prisoners to become eligible for Pell Grants, and forgiving the capital loans to Historically Black Colleges and Universities. This second stimulus act allocates over $500 million in financial aid to Texas students and $1.2 billion to Texas institutions of higher education.

Federal Aid for Higher Education at Texas Institutions

CARES Act Consolidated Appropriations Act
Student aid $511,010,443 $505,497,586
Institutional Assistance $511,010,443 $1,225,520,018

Sources: CARES Act Text of Bill (https://www.nasfaa.org/uploads/documents/CARES_Act_Final_Text.pdf); Student Loan Payment Delay: MarketWatch.com, “$2 trillion coronavirus stimulus package lets some student-loan borrowers delay payments for six months” (https://www.marketwatch.com/story/2-trillion-coronavirus-stimulus-bill-gives-student-loan-borrowers-six-months-of-relief-2020-03-26); Extended Student Loan Payment Delay: U.S. Department of Education, Federal Student Aid, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents (Coronavirus and Forbearance Info for Students, Borrowers, and Parents | Federal Student Aid); Consolidated Appropriations Act: National Association of Student Financial Aid Administrators, “Congress Releases Bipartisan Year-End Spending Deal, FAFSA Simplification, COVID Relief, and Other Student Aid Provisions (NASFAA | Congress Releases Bipartisan Year-End Spending Deal, FAFSA Simplification, COVID Relief, and Other Student Aid Provisions)

CARES Act Allocations in Texas Regions

Two hundred ninety-six Texas institutions were allocated $1.02 billion through the CARES Act. The proportion of allocations by region are very similar to the proportion of Fall 2018 enrollment by region. Institutions in the most heavily populated regions of the state – the Central Texas, Gulf Coast, and Metroplex regions – will receive nearly three-quarters of a billion dollars in total to help students, employees, and higher education institutions weather the COVID-19 pandemic.

CARES Act Allocations at Texas Institutions by Region

CARES Act Allocations at Texas Institutions by Region, Ma;

CARES Act Allocations at Texas Institutions by Region

CARES Act Allocations at Texas Institutions by Region

Sources: U.S. Department of Education, Allocations for Section 18004(a)(1) of the CARES Act (https://www2.ed.gov/about/offices/list/ope/allocationsforsection18004a1ofcaresact.pdf); Enrollment by Region: U.S. Department of Education, National Center for Education Statistics, IPEDS Data (http://www.nces.ed.gov/ipeds/).

CARES Act Allocations Vary by Sector in Texas

In March 2020, the CARES Act was signed into law to provide financial relief to people and organizations across the country while the COVID-19 pandemic stalled the economy. The bill included a provision to provide about $14 billion to higher education institutions and students. Using the guidance provided in the bill, the U.S. Department of Education developed a formula to determine how much funding each institution will receive. Texas institutions are allocated about $1.02 billion.

Compared to total enrollment figures, public two-year institutions are receiving proportionally less of the allocations while the other three sectors are receiving proportionally more. However, the CARES Act allocations are based on full-time equivalent (FTE) enrollment, which is a calculation that determines how many students would be attending if all enrolled students were enrolled full time. The higher an institution’s proportion of part-time enrolled students, the lower their FTE enrollment number will be. Public two-year institutions in Texas have much higher proportions of part-time students than other sectors – 72 percent at public two-year, 30 percent at public four-year, 12 percent at private non-profit, and 14 percent at proprietary. The allocation formula also excludes students who were already exclusively enrolled in distance education. The public two-year sector in Texas has a higher proportion of distance education students compared to the other three sectors.

CARES Act Allocations at Texas Institutions by Sector

CARES Act Allocations at Texas Institutions by Sector

School Type Total Allocations Number of Institutions
Public Four-Year $500,029,127 43
Private Non-Profit* $105,694,744 68
Pubic Two-Year $328,113,876 64
Proprietary $88,183,138 121

*This category includes 4-year or above, 2-year, and less-than 2-year institutions. Ninety percent of the Private Non-Profit Texas institutions receiving allocations are 4-year or above.
Sources: U.S. Department of Education, Allocations for Section 18004(a)(1) of the CARES Act (https://www2.ed.gov/about/offices/list/ope/allocationsforsection18004a1ofcaresact.pdf); Enrollment by Sector: U.S. Department of Education, National Center for Education Statistics, IPEDS Data (http://www.nces.ed.gov/ipeds/).

Consolidated Appropriations Act Allocates Aid to Areas of Greatest Need

The second COVID-19 pandemic stimulus legislation, the Consolidated Appropriations Act, provides over $1.7 billion in assistance to students and institutions of higher education in Texas. Aid is being allocated roughly in line with enrollment patterns across geographic areas with the exception of the Metroplex which will receive 6-7 percentage points less than their proportion of enrollment in Texas. Students and institutions in the Rio Grande Valley will benefit from proportionately more HEERF funding than their share of Texas enrollment.

Consolidated Appropriations Act Allocations at Texas Institutions by Region

Consolidated Appropriations Act Allocations at Texas Institutions by Region

Consolidated Appropriations Act Allocations at Texas Institutions by Region

Consolidated Appropriations Act Allocations at Texas Institutions by Region

Sources: Consolidated Appropriations Act Allocations: U.S. Department of Education, “CRRSAA: Higher Education Emergency Relief Fund (HEERF II) (https://www2.ed.gov/about/offices/list/ope/ccrrsaa.html); Enrollment by Sector: U.S. Department of Education, National Center for Education Statistics, IPEDS Data (http://www.nces.ed.gov/ipeds/).

Consolidated Appropriations Act Channels Relief Disproportionately to Public Four-Year Sector

The second round of COVID-19 pandemic relief for higher education – the Consolidated Appropriations Act of 2021 – will be allocated using a formula that reduces some of the sectoral differences experienced with the CARES Act. In the CARES Act, Texas community colleges were allocated 32 percent of the funds even though their students comprise 46 percent of the enrollment. In contrast, Texas community colleges proportion of total Consolidated Appropriations Act funding will be 39 percent. Four-year public universities continue to receive a proportionally larger slice of the higher education relief funding. While the CARES Act allocations were split evenly between student aid and institutional aid, the allocations from the Consolidated Appropriations Act are weighted more heavily to institutional aid. The exception is that all aid allocated to proprietary institutions in this Consolidated Appropriations Act of 2021 is designated as student aid.

Consolidated Appropriations Act Allocations at Texas Institutions by Sector

Consolidated Appropriations Act Allocations at Texas Institutions by Sector

School Type Student Aid Institutional Aid Number of Institutions
Public Four-Year $249,298,069 $583,481,183 43
Private Non-Profit* $52,743,033 $115,313,898 67
Pubic Two-Year $154,034,029 $526,724,937 57
Proprietary $49,422,455 $0 126

* This category includes 4-year or above, 2-year, and less-than 2-year institutions. Ninety percent of the Private Non-Profit Texas institutions receiving allocations are 4-year or above.
Sources: Consolidated Appropriations Act Allocations: U.S. Department of Education, “CRRSAA: Higher Education Emergency Relief Fund (HEERF II) (https://www2.ed.gov/about/offices/list/ope/ccrrsaa.html); Enrollment by Sector: U.S. Department of Education, National Center for Education Statistics, IPEDS Data (http://www.nces.ed.gov/ipeds/).

Share This Page!

BACK TO TOP