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Higher Education

Higher education is critical to the Texas economy because it is the key to providing a highly qualified work force in an increasingly technical world. Higher education also helps to meet specific local and regional employer demands for skilled employees. Finally, it provides higher salaries throughout a graduate’s lifetime, increasing the quality of life for these individuals and their families.

The Texas Legislature recognized the importance of these factors by referencing the Texas Higher Education Coordinating Board’s (THECB) Closing the Gaps master plan for higher education in state law.208 The plan calls for improved statewide participation, better graduation outcomes, improved excellence and increased research funding by 2015.209

In recent years, partly in response to THECB’s plan and its tracking measures,
the state has made major changes to its higher education system, including its funding methods, student financial aid and admission policies. In the process, the state has explored fundamental Questions about the system, its structure and purpose; enacted innovative and sometimes untried policies; and addressed controversial issues – some of which remain unresolved.


One factor affecting higher education participation is the availability of educational opportunities. Texas has 145 higher education institutions, including 101 public universities and colleges. Public institutions include 35 universities, nine health-related institutions, seven technical and state colleges and 50 community college districts; private institutions include 39 universities, two junior colleges, two chiropractic colleges and one medical school (Exhibit 37).210

Exhibit 37

Texas Public Institutions of Higher Education

Map of Texas showing where public institutions are located.

(Texas Public Institutions of Higher Education, Text Alternative)

In addition, the Texas Workforce Commission lists about 250 proprietary and nonprofit schools in the state, many with multiple campuses, offering career and technology training.211 Online opportunities also have increased the availability of higher educational programs to anyone with access to a computer.

To make more classroom education available in regions with growing or high demand, and to conserve on costs, the state has established nine higher education centers, sometimes called multi-institution teaching centers (MITCs), that offer courses at one central location or at several sites. MITCs are partnerships between institutions of higher education and may include public community and technical colleges, public universities and independent colleges and universities. Students enroll through their college or university but can attend classes at the MITC.212

In addition, Texas is establishing a new medical school in El Paso and has authorized a new MITC in East Williamson County.213 Certain junior colleges also have been authorized to offer up to five baccalaureate programs.214 These additions will increase availability for undergraduate and graduate education in areas of the state where demand has outpaced availability.

Texas’ community colleges, which are open to anyone who applies and serve almost all areas of the state, offer a variety of one-year technical certifications and two-year associate degrees in a wide variety of technical and academic subjects. In addition, the community college system offers many classes at night and on weekends year-round, through the Internet and at satellite centers such as high schools, providing flexibility that allows the system to respond relatively quickly to changes in enrollment, employer and regional demand.


Higher education was appropriated $10.1 billion – about 12 percent of the state budget – for fiscal 2008.*

Even so, THECB reports that 17 percent of two-year students in its Southeast region and 15.6 percent in its Northwest region attended Texas two-year institutions outside their home region in 2005, compared with just 5.6 percent statewide. This may reflect a lack of institutions within these (generally more rural) areas; closer proximity of students to institutions in neighboring regions; or greater availability of course offerings in other regions.215

THECB’s Northwest and Upper East Texas regions ranked highest in 2005 for the percentage of students traveling outside the region but within the state to attend undergraduate universities – 65.3 percent and 64.1 percent respectively, compared with 36.3 percent statewide. These percentages probably reflect the relatively low number of universities in those regions.216

Demand has outstripped the supply of certain programs, such as Nursing , throughout the state. In response, Texas has increased incentive funding for Nursing and other allied health programs in short supply and streamlined the process for establishing new Nursing programs beginning in 2007.217 As a result, some areas are starting to see lower Nursing demand or are projecting additional nurses being available in the near future.218 Although the demand is still greater than the supply, THECB reports that the state is now on target for meeting its 2015 goals for graduates in health fields.219


Another factor affecting participation in higher education is the accessibility of educational opportunities. One of the most debated aspects of this issue has been admission to Texas universities.

Since 1998, the state has guaranteed admission to Texas public universities to all Texas high students ranked in the top 10 percent of their high school graduating classes. Starting in 2008-09, freshmen must also graduate under the more demanding Recommended or Distinguished Achievement high school graduation plans to gain automatic admission under the 10 percent rule. (See the Outcomes section for a discU.S.on of graduation plans.)220

Higher education leaders attribute the increased numbers and percentages of minorities, particularly Hispanics, enrolled in Texas institutions, and particularly at the University of Texas at Austin (UT), primarily to the 10 percent rule; other factors, such as increased recruitment and incentives, also have contributed.221

The Hispanic population in Texas rose by 22.1 percent from 2000 to 2005 (most recent data available).222 Total Hispanic enrollment at Texas public universities rose from 81,180 in fall 2000 to 117,816 in fall 2007, a 45.1 percent increase; UT’s total Hispanic enrollment rose from 5,920 to 7,991 over the same period, a 35 percent increase.

Exhibit 38

The University of Texas at Austin
and Statewide Students Under the Top 10 Percent Rule
as Percent of Total First-time Undergraduates

Graph showing the number of applicants, acceptances and enrollments at both The University of Texas at Austin and Statewide.

(Top 10 Percent Rule's Effect on Undergraduates,Text Alternative)

The increase in UT’s Hispanic enrollment is more significant than these numbers indicate, however, since UT kept its total enrollment relatively flat from fall 2000 to fall 2007 at about 50,000 students, compared with an 19.9 percent increase in total enrollment for public universities statewide. UT increased the Hispanic share of its total enrollment from 11.8 percent in fall 2000 to 15.9 percent in fall 2007, compared with 19.6 percent to 23.7 percent statewide. Despite these increases, since the statewide share of Hispanic enrollment also increased, the university continues to lag about 7.8 percentage points behind the statewide share.223

In all, then, UT’s Hispanic share of total enrollments rose by 4.1 percentage points from fall 2000 to fall 2007, the same as statewide enrollment growth of 4.1 percentage points. From fall 2000 to fall 2005, however, the Hispanic share of the state’s total population increased by 3.6 percentage points, from 32 percent to 35.6 percent. At this rate of growth, enrollments statewide and at UT will continue to lag behind the Hispanic share of the state’s population.224

Black enrollment at UT grew by 33.6 percent from fall 2000 to fall 2007, from 1,582 to 2,113; this represents an increase from 3.2 percent of total enrollment to 4.2 percent during the same period. Statewide, Black enrollment increased from 9.8 percent of total enrollment to 11.4 percent.225 The Black share of the state’s total population fell from 11.5 percent in 2000 to 11.4 percent in 2005, which means that the gain in share of enrollment has been a real gain when compared with population growth.226

The 10 percent rule also is having an effect on the number and percentage of females accepted to Texas public universities. Statewide, 62 percent of students accepted under the 10 percent rule in summer and fall 2006 were female, compared with only 54.8 percent of total students accepted; females represented 53.9 percent of all applicants. At UT, 58.5 percent of students accepted under the top 10 percent rule were female, but only 46.5 percent of students accepted under other criteria were female. Females represented 54.3 percent of all students accepted to the university.

The percentage of first-time undergraduates accepted to Texas public universities who ranked in the top 10 percent of their high school graduating class rose from 21.1 percent in fall 2000 to 23 percent in fall 2006. First-time undergraduate acceptances at UT under the 10 percent rule, however, have increased from 31.9 percent in fall 2000 to 72.8 percent in fall 2006. The top 10 percent group at UT increased from 52.1 percent of fall enrollment of first-time undergraduates in 2000 to 75.8 percent in fall 2006. Statewide, the top 10 percent group enrollment rose from 25.3 percent to 26.5 percent of the total enrolled (Exhibit 38).227

The increase in the top 10 percent group as a percentage of the total enrolled as first-time graduates at UT was due primarily to relatively flat total acceptances and enrollment compared to an increase in applicants in the top 10 percent group and a cut in total acceptances in fall 2003. UT cut total acceptances in fall 2003 by almost 1,000 students from the year before and did not exceed fall 2002 acceptance levels until fall 2006. Although UT increased total acceptances by 11.2 percent over the fall 2000 to fall 2006 period, total first-time undergraduate enrollment rose only slightly, by 2.6 percent, after dipping below fall 2000 levels in fall 2003 (Exhibit 39).228

Exhibit 39

UT Applicants, Acceptances and Enrollments
First-time Undergraduates
Total and Top 10 Percent Group
Fall 2000–Fall 2006

Graph showing the total number of applicants, acceptances and enrollments at The University of Texas at Austin versus 10% rule applicants.

(UT Applicants, Acceptances and Enrollments Under Top 10% Rule,
Text Alternative)

Nearly 40 percent of all Texas students who qualify for automatic admission under the 10 percent rule apply to UT.229 A continuing rise in the number of high school graduates accepted to UT under the rule poses a potential problem for some who prefer that the university maintain its current size, as it has for many years, and employ more than one criterion to select students; others view it as a positive way to increase qualified candidates and minority enrollment.230

Although the total number of first-time undergraduate students at Texas public universities has increased, the percentage of applicants accepted has declined slightly, from 88.5 percent in fall 2000 to 87.6 percent in fall 2006; the number of applications grew by 41 percent and the number of applications that were accepted grew by 39.6 percent. The top 10 percent group grew as a percentage of enrollment from 25.3 percent to 26.5 percent from fall 2000 to fall 2006.231 These data indicate that for the most part, universities are expanding to accommodate applicants, and the top 10 percent group is having little effect on competitiveness.

For UT, the percentage of first-time undergraduate applicants accepted to the university declined from 85.8 percent in fall 2000 to 71 percent in fall 2006.232 Total fall applicants to UT increased by 4,386 over this period, but the total accepted increased by only 1,224; applicants accepted under the top 10 percent rule increased by 5,348.233 If these trends continue and UT does not expand its capacity, gaining admittance to this institution may become increasingly difficult for those who do not qualify under the 10 percent rule.


Another key to increasing both participation and graduation outcomes is ensuring the affordability of higher education. Traditionally a “low tuition, low aid” state, Texas deregulated tuition in 2003, allowing institutions to set their own rates.234 To offset the resulting tuition increases, the state expanded financial aid––but not enough to curb a growing gap between college costs and aid.

The state requires its public undergraduate institutions to set aside 15 percent of state-mandated resident tuition and, since deregulation, not less than 20 percent of other tuition above $46 per semester credit hour, to assist undergraduate students with financial aid.

In addition to institutional and federal financial assistance and tax incentives, eligible students can access a wide variety of state aid as well as a 529 college savings plan, which provides special tax benefits under section 529 of the Internal Revenue Code to families that set aside funds for future college costs. In Texas, the plan is called the Texas College Savings Plan; it was established and is maintained by the Texas Prepaid Higher Education Tuition Board (TPHETB) and staffed by the Comptroller of Public Accounts.235 The 2007 Legislature passed a program of prepaid tuition contracts, also administered by TPHETB and staffed by the Comptroller’s office, which starts September 1, 2008, and will allow families to purchase tomorrow’s tuition at today’s costs.236

Texas public and private institutions of higher education received about $4.8 billion in total need-based financial aid to assist students in fiscal 2006. Need-based aid includes gift aid, which does not have to be paid back, loans and work-study. The federal government awarded 76.1 percent of that amount; the state provided another 11.3 percent, or about $541 million; institutions gave 6.8 percent
of the total; and 5.8 percent came from other sources.237 Total annual aid has risen by about 60 percent since fiscal 2002, but the state has more than doubled the amount it contributes.238

The state’s largest program, the TEXAS Grant Program, which began in fiscal 2000 with $19.8 million, disbursed $198.7 million to 62,435 recipients in fiscal 2008. An estimated 42,000 students that qualify for the grant in fiscal 2008 will not receive it due to inadequate funding levels.239

Another new effort, the B-On-Time Loan Program, which forgives loans of students who graduate on time, provided 7,384 students with $26.9 million in fiscal 2006. Currently, the program has no funding for new students.240

In fiscal 2006, about half of all students attending Texas public and private institutions, more than 582,000, received some type of need-based aid. This represented 62.5 percent of students who enrolled and applied for such aid. Of the total receiving aid, 94 percent registered Texas as their home state.241

Despite recent increases in state financial aid, the gap between actual college costs and aid received by Texas students rose from $2.3 billion in fiscal 2001 (in constant 2006 dollars), to $3.9 billion in 2006, a 71 percent increase in costs that students and their families must cover (Exhibit 40).242

Exhibit 40

Aggregate Costs of Attendance versus
Aggregate Financial Aid Funds
Constant 2006 Dollars

In millions

Graph showing the total number of applicants, acceptances and enrollments at The University of Texas at Austin versus 10% rule applicants.

(Costs of Attendance versus Financial Aid Funds,
Text Alternative)

Estimated average annual tuition and fees at Texas undergraduate universities, based on 30 semester credit hours increased by $2,128, or 61.8 percent, from 2003 to 2007.243

Community colleges have the lowest tuition and fee requirements, although students who live outside community college taxing districts must pay more than in-district students. Annual public community college tuition and fees for students living within the community college taxing district, based on 15 credit hours for each semester, averaged an estimated $1,639 in 2007-08, compared with $5,569 for undergraduate universities. THECB estimates total 2007-08 resident costs of attending community colleges – including tuition and fees, books and supplies, room and board, transportation and personal expenses – at $10,456, and undergraduate institutions at $16,995.244


By fall 2006, Texas was about a third of the way to reaching its Closing the Gaps participation outcomes for total enrollment in undergraduate education for 2015. Progress toward the goal, however, as measured by the percentage of the population enrolled in higher education institutions, is slowing. The plan also sets goals for increased participation of Hispanic and Black students; while progress is on target for Blacks, it is below target for Hispanics.245

Fall 2006 enrollment in all colleges and universities in the state was 1.2 million, about 5.3 percent of the state’s population. Enrollment was 5 percent of the population in 2000; the 2010 goal is 5.6 percent and the 2015 goal is 5.7 percent, which would place Texas third among the ten most populous states behind California and Illinois.246 Enrollment in public institutions represented 90.3 percent of the total in 2006. Enrollment in two-year institutions amounted to 48 percent of the total.247

Community colleges absorbed the greatest enrollment increase, rising 29.2 percent from fall 2000 to fall 2006, an increase representing more than 126,000 students. Public universities increased their enrollment by 18.5 percent, or more than 76,000 students, over the same period.248

Although Hispanic enrollment at all Texas public and independent institutions rose by 40.7 percent from fall 2000 to fall 2006, their participation represented only 3.9 percent of the Hispanic population in 2006. While this was an improvement over the 3.7 percent participation rate in 2000, it is well below the Closing the Gaps targets of 4.8 percent for 2010 and 5.7 percent for 2015. To reach the 2010 target alone, Hispanic enrollment must increase by another 41.9 percent.249

Black enrollment is on target for meeting the Closing the Gaps goals for both 2010 and 2015, and THECB cited this improvement as “one of the most important accomplishments” since the start of the effort. Enrollment for this group was 31.5 percent higher in fall 2006 than in fall 2000 and is equivalent to 5.4 percent of this group’s estimated population – up from 4.6 percent in 2000.250

The public college and university population is projected to increase to 1.1 million by 2040, assuming 50 percent of the net migration rate that occurred during the 1990-2000 decade. Enrollment in public community colleges is projected to grow to about 588,000 and to 478,000 for public colleges and universities.251

Exhibit 41

Public College and University Enrollment by Ethnicity

Ethnicity Fall 2000 Fall 2006 2040 Projected
White 55.4% 49.7% 38.4%
Black 10.4% 11.3% 9.4%
Hispanic 24.4% 28.4% 44.2%
Other 9.8% 10.6% 7.9%
Total 100.0% 100.0% 100.0%

Note: Numbers may not total due to rounding.

Sources: Texas Higher Education Coordinating Board and Texas State Data Center.

Hispanic enrollment as a share of the total is projected to increase to 44.2 percent by 2040; all other ethnicities are projected to decline as a percentage of the total. White enrollment is projected to decline to 38.4 percent; Black enrollment, to 9.4 percent; and other ethnicities, to 7.9 percent (Exhibit 41).252

About half of all Texas high school graduates enroll in a higher education institution in the fall following graduation; of these, about half attend two-year institutions. In recent years, Texas has strengthened its high school graduation requirements, improved academic content in all grades, established standards and accountability systems and expanded its offerings of dual-enrollment classes.253

These changes should improve student preparation for the work force and increase the share of students who attend college after high school. The share of Texas high school graduates entering Texas public higher education institutions in the fall following graduation rose from 43.4 percent in 2000 to 46.1 percent in 2006, a difference of more than 18,000 students.254


Trends show that Closing the Gaps college graduation outcomes are on target for meeting overall 2015 goals, but the state is slightly below its target for producing math and science teachers and well below its target for math and science graduates. On the other hand, the state is above target for increasing allied health and Nursing graduates by 2015, an area that is still in high demand. Growth from 2000 to 2006 was 30.9 percent despite a decline from 2000 to 2001 that did not recover for two-year institutions until 2003 and for four-year institutions until 2004.255

Although the increase in the total number of bachelor’s and associate’s degrees and certificates awarded is currently on target, the trend is slowing and flattening. The 27.1 percent increase in degrees awarded since fiscal 2000, which rose to 147,705 degrees in fiscal 2006, will not be enough to reach the 2015 goal of 210,000. To meet this goal, institutions must increase the number of degrees awarded by another 42.2 percent from fiscal 2006 (Exhibit 42).256

Exhibit 42

Public and Independent Institutions’
Bachelor’s and Associate’s Degrees and
Certificates Awarded and “Closing the
Gaps” Targets

Graph showing number of degrees and certificates awarded from 2000 through 2006 and projected targets for 2010 and 2015.

(Degrees and Certificates Awarded and Targets,
Text Alternative)

Improving the college readiness of high school students can improve the number of students who stay in college, which in turn will improve graduation rates. A steadily increasing percentage of first-time, full-time, degree-seeking students entering Texas public universities are now graduating –– about 24.3 percent within four years and about 56.7 percent within six years.257

For Texas community colleges, 11.7 percent of first-time, full-time students received a credential within three years as of fiscal 2005, and 30.6 percent did so within six years. This represents an improvement from fiscal 2000, when 10.8 percent received a credential within three years and 25.7 percent received one within six years.258 About a third of students who graduated from a Texas university in 2005 had completed at least 30 semester credit hours at a community college.259

In fall 2003, about one-half of first-time entering students did not meet state standards in at least one area of math, reading or writing. For public universities, the total was 21.2 percent and for two-year institutions, it was 61.6 percent.260

About 65.8 percent of the high school graduating class of 2006 took either the SAT or ACT college entrance exams; of those, only 27.1 percent scored at or above the criterion used to determine college readiness. In 2007, about 53 percent of high school students were college-ready in English Language Arts and 54 percent in Mathematics, according to the TEA’s higher education readiness testing program.261

Recent increases in high school graduation requirements and the strengthening of academics throughout public education may improve these percentages in the future. In the meantime, students and institutions must rely primarily on costly noncredit, remedial courses to prepare students for college-level work.


Besides participation and graduation outcomes, Closing the Gaps calls for increasing excellence in higher education.

The Closing the Gaps target for 2010 is for one research institution, either public or private, to be ranked in the top 10 nationally and for two additional universities to rank among the top 30. For 2015, the goal is for two public research institutions to be in the top-ten national rankings for public research institutions, and four in the top 30.262

THECB uses the rankings from U.S. News & World Report, which produces the best-known ranking in this field, as one source to evaluate this measure.263 The publication uses a wide variety of criteria, including acceptance, retention and graduation rates, class size, faculty measures, expenditures per student, peer assessment, alumni giving, student selectivity and other measures.264

For the upcoming 2008 year, U.S. News & World Report ranked UT 13th among public institutions, and Texas A&M University, 23rd.265 UT has steadily improved its ranking, from 17th in 1999; but A&M has fallen from 15th, a place it held from 1999 through 2002.266

For public and private research institutions, THECB employs rankings from Arizona State University’s Center for Measuring University Performance.267 The center uses criteria based on factors such as research and development expenditures, including federally sponsored research expenditures; endowments; significant faculty awards; doctorates granted; the number of postdoctoral appointments supported; and median entering student SAT scores (as an indicator of student competitiveness).268

In 2006, according to the Center for Measuring University Performance rankings based on 50 criteria, among public and private institutions, UT tied at 28th nationally, A&M ranked 32nd and Baylor College of Medicine tied at 40th. Among public institutions only, the center ranked UT tied at 13th with the University of Florida and A&M at 16th.269

On the other hand, the plan is on target for meeting national recognition goals for excellence in certain programs, including those of community colleges. In addition, the plan calls for increasing the state’s share of federal research and development funding for science and engineering research, a goal that is slightly below target as of 2007.270

The plan’s other research goal – to increase overall research funding in real dollars – is on target for meeting its 2015 goal.271 Increased research funding, and particularly an increased share relative to other institutions, is one measure of quality since it demonstrates the degree of confidence that funding sources have in an institution’s capability.


State appropriations to higher education, including federal and other funds, totaled $16.9 billion in 2006-07 – 11 percent more than in the previous biennium.272

Higher education received $10.1 billion in state general revenue appropriations for operations support for the 2006-07 biennium, an 8 percent increase from 2004-05. Of this amount, public universities received $4.3 billion; health-related institutions, $2.4 billion; community and technical colleges, $2.1 billion; and other higher education programs, $1.3 billion.273

In fiscal 2006, total revenue for Texas public undergraduate universities amounted to $7.1 billion, excluding funds from the Permanent University Fund and the Higher Education Fund that are used for capital expenditures. Of this total, 36.4 percent came from state appropriations; 28 percent from tuition and fees; 19.3 percent from the institutions’ funds; and 16.3 percent from federal funds. The fiscal 2006 general revenue appropriation per full-time equivalent (FTE) student was $6,259, 8.4 percent more than in fiscal 2004. Total revenue per FTE student was $17,185, an 18.2 percent increase since fiscal 2004. The difference was due mostly to higher tuition and fee revenue.274

Community colleges receive funding for their operations primarily from tuition and fees and state appropriations, augmented by local tax revenue; local tax revenue pays for their infrastructure and equipment. State appropriations are based on a dollar amount per “contact” hour – each hour a student spends in class with a professor. The state’s technical two-year colleges receive funding primarily from tuition and fees and state appropriations.

Average general revenue funding per contact hour for community colleges declined from $7.47 in 2000-01 to $6.62 in 2006-07 – about 11.4 percent – after reaching a high of $7.71 in 2002-03. Funding will increase to $7 per contact hour for these institutions in 2008-09.275

Education Questions for Further Consideration

  • What can Texas do to keep the costs of higher education affordable for all Texans?
  • What can Texas do to increase the number of bachelor’s and associate’s degrees awarded?
  • What can Texas do to draw in more research dollars for institutions of higher education?
  • How do we prepare non-college bound Texans for careers that will provide economic benefit to them, their families and the state?

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