Georgia Invests $255 Million More In FY 2023 Budget for College Affordability

Two of the biggest higher education investments and policy changes this year come through the Fiscal Year (FY) 2023 budget, which will go into effect on July 1, 2022: state funding of the Special Institutional Fee (SIF), and an increase in HOPE awards at some schools to cover 90 percent of tuition. Combined, these two measures could mean significant savings for college students starting in the fall. For example, a student at the University of Georgia receiving HOPE would see a savings of $2,040 over two semesters: $900 from the removal of the Special Institutional Fee from their tuition bill and $1,140 from an increase in HOPE awards.

State Funding of Special Institutional Fee Saves University System Students 40 percent on Mandatory Fees

The FY 2023 budget includes $230 million for the University System of Georgia (USG) to remove the Special Institutional Fee from students’ tuition and fee bills. State general funds will cover SIF for colleges and universities this year.

• The University System of Georgia adopted the Special Institutional Fee in 2009 to make up for revenue loss from state budget cuts.
• SIF supports general operating expenses for colleges and universities. In this way, it acts like tuition and not like other fees that support specific services, such as a health center.
• In 2021-2022, students paid $230 million total to colleges and universities in this fee. SIF was typically the largest fee, making up about 40 percent of mandatory fees.

All university system students pay the Special Institutional Fee at a flat per-semester rate, including part-time students enrolled in five or more credit hours. This makes the total cost of a degree more expensive for part-time students, who represent one in three students at USG. Graduate students also pay the SIF out of their research and teaching stipends.

Setting HOPE at 90 Percent of Tuition Helps Students at Technical Colleges and Six USG Schools

The budget also includes an important policy change to lottery-funded HOPE Scholarships and Grants, setting HOPE awards at 90 percent of tuition. This change does not affect students attending private colleges and universities.

Since 2011, HOPE Scholarships and Grants have covered partial tuition for students, but the percentage has differed from year to year and from school to school. HOPE Grants cover 76 percent of tuition for students pursuing certificates and diplomas at technical colleges. The scholarship ranges from a low of 75 percent of tuition at the Georgia Institute of Technology to a high of 94 percent at Georgia Highlands College and East Georgia State College. The budget maintains HOPE rates at colleges and universities where the scholarship now covers more than 90 percent of tuition.

The Georgia Student Finance Commission estimates increasing HOPE awards to 90 percent of tuition will help about 75,000 students, based on FY 2021 enrollment numbers. This includes more than 32,000 students at technical colleges and almost 43,000 students at six University System of Georgia (USG) schools. HOPE awards at 20 university system colleges and universities were already at least 90 percent and will not be affected by this change.

Overall, about 37 percent of the increased lottery funds will go to an estimated 32,000 students at technical colleges and 34 percent to an estimated 11,000 students at the University of Georgia.

The HOPE rate change will affect a diverse group of students. About 56 percent of HOPE recipients in the university system are white, 21 percent Black, 10 percent Latinx, 7 percent Asian and 5 percent multiracial.[1]  In the technical college system, 48 percent are Black, 41 percent white, 7 percent Hispanic/Latinx, 2 percent multiracial and 1 percent Asian.[2]

HOPE Rate Change Affects Estimated 75,000 Students

*Augusta University awards will increase $150 at the Health Sciences campus and $60 at the Summerville campus.

Source: Estimates for students affected and HOPE increase provided by Georgia Student Finance Commission; totals calculated by GBPI.

Note: Estimates are based on FY 2021 enrollment; actual counts could be different once FY 2023 is completed and utilization numbers are finalized.

Why Did HOPE Cover Different Tuition Percentages at Different Schools?

In FY 2012, the state set all HOPE awards at 90 percent of tuition. Since then, Georgia Student Finance Commission increased HOPE awards at a consistent rate across colleges and universities, but individual schools have increased tuition at differing rates. At some schools, like the University of Georgia and Georgia Institute of Technology, tuition grew much faster than HOPE awards.

For example, from FY 2012 to FY 2022, per-semester tuition at Georgia Tech grew by $1,488, while HOPE awards grew $658.50. In contrast, at Middle Georgia State University, tuition grew by $317 per semester while the HOPE award grew $377.70. Higher tuition increases at Georgia Tech meant the percentage that HOPE Scholarships covered fell. Therefore, increasing HOPE awards to 90 percent tuition provides a benefit to Georgia Tech students, but not Middle Georgia State University students.

Impact on Lottery Funds

To increase lottery-funded HOPE awards to 90 percent at all schools, the FY 2023 budget allocates an additional $20 million for HOPE Scholarships and $4.6 million more for HOPE Grants to the Georgia Student Finance Commission, which administers HOPE.

This policy change reverts to the pre-2011 design of linking HOPE awards to tuition rates, though at a lower rate of 90 percent. When lawmakers changed HOPE, they stated that decoupling HOPE and tuition rates were to control costs and ensure its financial sustainability.

The effects on future HOPE appropriations are unclear. The Zell Miller Scholarship, which covers full tuition, has grown the fastest. Zell Miller Scholarships experienced 16 percent average annual cost growth between FY 2014 and FY 2020, and 13 percent student growth. HOPE Scholarships for students at public colleges and universities experienced five percent average annual cost growth and two percent student growth.

Lottery appropriations run a surplus every year, which transfers to lottery reserves held by the State Treasury. For example, $71 million in lottery dollars went unspent at the end of FY 2021. Current lottery reserves dedicated to HOPE shortfalls total $619 million, with $1 billion in addition to that.

In addition to these two exciting funding changes, the Legislature passed the following legislation with corresponding budget items related to higher education in Georgia:

• HB 1435 creates a needs-based college completion grant. The FY 2023 budget redirects $10 million in lottery funds from Student Access Loans towards these grants.
• SB 397 changes the HOPE GED program to HOPE HSE (High School Equivalency). The new program will pay GED and HiSET (High School Equivalency Test) exam costs for test-takers, and the budget includes a related increase of $923,843.
• SB 379 expands apprenticeships across the state, and the budget includes an additional $1.3 million.
• HB 1013 provides a variety of mental health care reforms, including adding mental and behavioral health professions to the existing service-cancelable education loans program, which will allow individuals to cancel a portion of their loans for each year of practice in Georgia. The budget includes $10 million for these loans.

Students should see the impact of these legislative and budget changes in the fall. State funding of the SIF and the HOPE rate increase could mean more than $2,000 of savings next year for some students, as well as up to $2,500 in completion grants. Students and the state share the responsibility to pay for higher education, and both state revenues and lottery funds must remain strong to keep these two changes sustainable. Using funds to strengthen colleges and universities and increase student grants and scholarships are both positive steps that support college affordability.

Endnotes

[1] Based on Fall 2018 HOPE recipients. One percent categorized as “Other.”
[2] Based on Academic Year 2019 HOPE Grant recipients. One percent categorized as “Other.”