Montclair State University
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NEW JERSEY’S TUITION AID GRANT (TAG) PROGRAM April 2017 Summary The current TAG program significantly disadvantages the tens of thousands of New Jersey students who study in the State’s two-year and four-year public colleges and universities. This issue is extremely important because, in regard to public higher education, New Jersey functions on “a high tuition/high financial aid” model. That is, the State provides low operating and capital funding and expects the public institutions to rely on higher tuition charges, while the State provides a generous financial aid program to help students pay those higher public tuitions. Obviously, if the State’s TAG program is not providing adequate support to students in the public institutions, the model fails, and public higher education becomes less affordable. In New Jersey, the TAG program has been shaped to maintain high financial aid support to students attending private institutions, but it has declined in support for students in the public sector. Key Points • The identical student receives much larger TAG awards if they attend a private institution than if they attend a public institution. • Students who are eligible for substantial TAG awards if they attend a private institution, in many cases, are not eligible for any award at all at a public institution. • Governor Christie proposed the addition of $17.8 million in new money for TAG in FY ’17. The Legislature proposed language that would use the new money to take some initial steps to correct the current TAG methodology. The Governor vetoed that provision, and the new money was used in FY ’17 in a way that continued to increase the difference in the size of TAG awards for students at the private institutions over the public institutions. • Governor Christie has proposed an additional $15.7 million in new money for TAG in FY ’18. That new money should be used to decrease the inequities in TAG awards between students in the private and public sectors of higher education. • The current TAG awards even for the students with the greatest need in the public institutions do not come close to covering the costs of tuition and mandatory fees, and that fact is, in significant part, responsible for the debt burden of students attending the public institutions. Even students who also get the maximum federal Pell award struggle to afford their education, especially those who seek to live on campus, which is a very important component for success for students from challenged circumstances. • Instead of assessing the financial need of the student and providing that student with a defined TAG award that the student can then use at whichever institution best meets his or her needs, the current TAG system eccentrically and inequitably puts a different value on the size of the award it will give to a student depending on which institution he or she attends. • The TAG program, which would constitute a $420 million annual taxpayer-funded expenditure under the Governor’s proposed budget, is in serious need of reform. Background The TAG program, as we know it today, was established in 1978. As expressed in the legislative documents from the time, its primary purpose was to make general need-based grants available to students in both two-year and four-year public institutions. Previously, such grants had only been available to students in “non-tax-supported,” i.e., non-public, institutions. Eligibility for the award was based on the student’s estimated family contribution. The maximum award was $1,000, up to the amount of tuition, which, it was determined, would be enough to cover 100% of tuition at the community colleges (where tuition then was about $500), at the state colleges (where tuition then was $700), and at Rutgers (where tuition then was $760). At the non-public institutions, it was estimated that the $1,000 maximum would cover at least one-third of tuition at most non-public colleges. (For example, tuition at Rider in 1978 was $2,750; at Fairleigh Dickinson, it was $2,560.) The 1978 legislation turned over the regulation of the TAG program and the determination of financial eligibility requirements for the future to the Student Assistance Board (now known as HESAA, the Higher Education Student Assistance Authority). Since that time, the TAG program has evolved significantly through legislation, regulation, and HESAA administration. Most noticeable between then and now is that there has been a dramatic shift away from covering 100% of the cost at public institutions. While the maximum TAG award still covers approximately one-third or more of the cost at the non-public institutions, a maximum TAG award no longer comes close to covering 100% of tuition and mandatory fees at the public institutions. For example: at Essex Community College, the cost for a full-time student is $4,785, and the maximum TAG award is $2,734 or only 57% of the cost; at the state colleges and universities on average, the TAG award covers only 55% of tuition and mandatory fees; at Rutgers three campuses and NJIT, between 65.9% and 66.9% . Another important change that occurred since 1978 is that the eligibility of the non-public institutions was extended from independent institutions to also include certain religious and proprietary institutions. However, a much more significant change is that, whereas, in the past, the award amount available to public and non-public institutions was essentially the same, that is no longer the case. Today, the maximum award at non-public institutions is 75.3% higher than the average maximum award at the state colleges and universities ($12,438 compared to $7,096). In addition, the size of the awards from one public institution to another now varies very significantly. Today, the maximum Rutgers award is 33.4% higher than the average maximum award at the state colleges and universities ($9,468 compared to $7,096), and the maximum award at NJIT is 54.8% higher ($10,986 compared to $7,096). Even among the state colleges and universities, the awards differ significantly. For example, the maximum award at William Paterson University is $6,508, but $9,120 at The College of New Jersey. The same is true among the community colleges, with a maximum award of $2,192 at Rowan College at Gloucester County, but $3,144 at Bergen Community College. The currently established award schedules were determined over the years through a methodology that was not favorable to students attending public institutions and that strongly responded to and incentivized the raising of tuition, rewarding institutions that increased their tuitions with larger awards and keeping awards lower at those institutions that tried to keep their tuitions low. Of particular note is the fact that, in recent decades, for a variety of reasons, the public institutions have typically split the cost of education between two numbers, tuition and 2 8 mandatory fees.1 So, when public institutions report their costs, they are presented as tuition + mandatory fees = total cost. The mandatory fees are a significant portion of the total cost, ranging from 17% to 36% and averaging 27.9% at New Jersey’s ten traditional four-year public institutions. In other words, at public institutions, about one-third of the cost is collected through mandatory fees. The private institutions, on the other hand, have traditionally rolled most of the costs of education into one tuition number. The mandatory fees in private institutions are a very small percentage of the total cost, generally in the range of 2% to 7%. Both publics and privates are charging for the same things; they are just presenting the costs differently. However, the HESAA award methodology has been based only on the tuition number and not mandatory fees, and, as a consequence, about one-third of the mandatory cost of education for students in the public institutions remains unsupported by TAG grants. That fact is one of the reasons why TAG awards at the private institutions have grown so much larger than those at the public institutions. HESAA modified its approach, beginning with the 2014-15 year, by introducing a new procedure whereby, for any additional new monies applied to the TAG program, all schools would receive the same percentage increase. However, the baseline award for each school was established under the old system, so huge inequities continue to exist and are actually made even worse by the new procedure, because the same percentage applied to a school with a higher baseline will yield more dollars than it will when applied to a school with a lower baseline.2 And, finally, under the current TAG system, a student’s eligibility for a TAG award is based on an Eligibility Index which is tied to award tiers (see Attachment A). The more tiers an institution is permitted to have, the more students will be eligible for an award at that institution. Currently, the non-public independent, proprietary, and religious institutions have ten tiers in the award tables; Rutgers, NJIT and Rowan have nine tiers; the other public four-year institutions have seven tiers; and the community colleges have five tiers. In short, many of the students who would be eligible for a TAG award at a non-public institution would not be eligible for any award at a public institution. Worse yet, because of the inequitable way in which TAG awards were allocated to different institutions over the years, there are gross and unjustifiable differences in the tiers themselves. For example, at the non-public institutions, the TAG award for students on Tier 7 is equal to about 43% of the Tier 1 or maximum award.