STOP Texas 20% Tax on College Students! Repeal Tuition Set Aside Law!

We have to spread the word! The Texas Tuition Set Aside Law is an Obama style share the wealth TAX on Students simply because they are going to college. We have to call our State Senators and State Representatives. We have to call the Governor. Last week I wrote an article exposing this tax. This new article below explains, in detail, how and when the bills passed creating this tuition set aside required under Texas Education Code, Sections 56.011, 56.012, 56.095, and 56.465

What is the Texas 20% Tuition Tax?

This is simply outrageous! If you decide to work hard and get a higher education, a minimum 20% of the college tuition you pay does not even pay for your education, it gets taken out to pay for someone else’s education. This is thousands of dollars we are talking about! Your two jobs in college to pay tuition goes to someone else to get free tuition. Even worse, you might even not have the money to pay for tuition so you have to get a student loan to pay for college. You still get hit with the 20% tuition set aside tax. So basically you are being forced to take out a student LOAN in order to pay the tuition tax so that someone can go to college for free! Or if you take out a loan to pay for tuition and you also get a grant, in effect you are taking out a loan with interest to pay for your own grant. How does that make sense? I all about helping people go to college via student loans and even grants and scholarships, but we cannot target struggling college students to pay the tuition of other people.

How did we get the 20% Tuition Tax?

After my article last week, I have had many people almost not believe me because it does not seem possible that we have a law like this in Republican controlled Texas. Well, I did extensive research over the weekend and I looked up all the history and all the votes (I explain the history of this law in more detail below). Here is the quick overview: The 20% student Tax we have now is a result of a 2003 law that was passed. In 2003 NOT ONE Texas State Representative objected to 20% being inserted into the set aside “tuition tax” law, and NOT ONE State Rep. in 2003 offered an amendment to the bill that would end the tuition set aside tax. Yep, even conservatives we know and love today did not oppose the tax when it was passed in 2003. Since 2003 there have been a FEW Texas conservatives who have stood up and tried to present bills to end this tax, but those bills never saw the light of day. Even conservatives we know and love today have never stood up against this tax or tried to get it repealed, even though they ALL KNOW ABOUT IT. This is VERY disappointing! I believe if we can inform people and create enough outrage, we can wake up the Legislature and STOP THIS TAX! And when your legislature tries to tell you that he or she has been against this tax since 2003 and does not want it, then kindly ask them when they tried to amend the bill or repeal it. If they have never presented anything to be passed to end this tax then, no matter what they say, they are for it or at least are complacent in letting it continue!

Below is the Detailed explanation of how we ended up with the currently enforced tuition set aside program (a MINIMUM 20 percent tax on student tuition) This explanation only shows a detailed view of the Texas HOUSE of Representatives. I did not have time to examine the Texas Senate.

1)      Sometime before 2003, the Texas legislature put in the Texas Education code a requirement for not less than 15% and not more than 20% of a student’s tuition to be set aside as financial aid for other students (a tuition tax).

2)      In 2003 (78^th legislative session) Morrison and Brown, F. authored HB 3015 to amend the Texas Education Code to lower the set aside percentages (tuition tax). The bill text called for a minimum 7.5% and maximum 10%. This is a step in the right direction by lowering the tuition tax, but still bad because it keeps the tuition tax.

3)      HB 3015 was then sent to the house education committee where it was completely changed and renamed CSHB 3015. This new CSHB 3015 text changed the set aside rate to 15% of all tuition charged to a student in excess of $46 per semester credit hour. This moved the set aside rate at a minimum of 15% with no maximum, but it would apply only to tuition in excess of $46 per semester hour (so basically if you go to a cheap college where semester hours are less than $46 you don’t pay the tax but if you go to a college with more expensive credit hours then you pay the tax)

4)      CSHB 3015 then went to the full house for a vote. Several amendments were made.

a)      Shockingly, NO ONE made an amendment to do away with the tuition set aside (the tax on students who are paying tuition).

b)      An amendment was made by Villarreal and Menendez to create a graduate student tuition tax at a rate of not less than 15%. This amendment to tax graduate tuition (in addition to the already proposed tax on undergraduate tuition) was adopted WITHOUT OBJECTION (that means NOT ONE STATE REP spoke up to oppose this amendment or call to have a record vote to vote in opposition). Vote details from House Journal.

c)       An amendment was made by Rose, Bonnen, Villarreal and Menendez to change the undergraduate tuition tax from NO LESS than 15% to NO LESS than 20%. This amendment to INCREASE the Undergraduate Student Tax to 20% was adopted WITHOUT OBJECTION (that means NOT ONE STATE REP spoke up to oppose this amendment or call to have a record vote to vote in opposition) Vote details from House Journal.

5)      CSHB 3015’s tuition tax rate (no less than 15% for Undergraduate and no less than 20% for Graduate) stayed the same through the rest of the House amendments, and then made it through the Conference Committee with the Senate, and then was passed by both the House and the Senate and sent to the Governor who signed it. This tuition tax is still in effect TODAY.

6)      The FINAL House and Senate vote on CSHB 3015 (HB3015) was not unanimous. There were some who voted against the final bill. But voting against the final bill was NOT a vote against the tuition tax because if a State Rep. voted against the final bill then the Rep. was in effect voting to keep things the way they already were, including the pre 2003 tuition tax rate of no less than 10 and no more than 20 would have remained. Basically, even if a state Rep voted against the final bill, they still were voting FOR a tuition tax. The only way for a State Rep. to vote against and/or show opposition to the tuition tax would have been to propose an amendment, or vote in favor of an amendment to end the tax. No one proposed to end the tax, in fact, all votes in the house to increase the tax were passed without objection.

Since 2003, who has opposed the Texas Tuition Tax?

Unfortunately, since 2003 there have only been a few conservatives who have tried to oppose this tax ad offer bills to end it. Their efforts have all been shut down. Heck, I did not even know about this tax until recently because it was being well concealed. There was a website created some years back to try to expose this tuition tax but I guess it never was able to gain enough steam to end the tax. Well, it is time we break this issue wide open!

Recent Bills Proposed to End Tuition Tax:

This is likely not a complete list of the people who have proposed bills to end the tuition tax so if I am missing a bill please let me know. One thing is certain, there have been few bills proposed to end the tax and none of them were supported or got passed.

Dan Patrick in 2009 introduced and passed a bill (SB 1304) to force colleges to reveal to students that they were having a large portion of their tuition set aside to pay for other people’s tuition. Then in 2011, bills were introduced to END THE TUITION TAX. SB 444 was introduced by Patrick and Birdwell in the Senate and HB 587 by Kleinschmidt and Parker in the House. These bills NEVER MADE IT OUT OF COMMITTEE! My State Representative James White informed me that he also submitted a bill in 2013 to stop this tuition set aside but his bill was also never heard in committee.

Demand that the Texas Legislature STOPS the Tuition Tax on College Students. Repeal the Tuition Set Aside Program!

So here we are today. We have an Obama type share the wealth program that unfairly taxes only college students to pay for the tuition of other college students. Since deregulation and this set aside bill in 2003, tuition has increased nearly 100%. Students cannot even afford college, in part because at least 20% of their bill is an extra tax to pay for someone else’s bill.

There has not been sufficient information and outrage about this tax but that needs to change right now. We have a Republican dominated House but a bill to kill this tax cannot even make it out of and committee picked by Moderate Speaker Joe Straus, nor can a bill be passed out out of the less Republican dominated Senate.

We need to take a stand and Texas needs to Stop this Tuition Tax!

Related article: Texas Law Forces College Students to get Loans to Pay for Other People's Tuition