The changes come from a sweeping higher education bill that passed along with the Legislature’s budget last weekend, which will help families who make up to the state’s median income – just under $92,000 for a family of four. It has not yet been signed into law by Gov. Jay Inslee, who called on the Legislature to expand financial aid, but already, experts are calling it nationally significant.
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It’s a “unique and brilliant” approach, said college-aid expert Sara Goldrick-Rab, a Temple University professor and author of “Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream.” She called the bill “pretty much the most progressive state higher ed funding bill I’ve seen at the state level in years.”
The Workforce Education Investment Act is expected to raise nearly $1 billion over four years through a three-tiered hike in the state’s business-and-occupation tax. It calls for increased tax rates on about 82,000 of the 380,000 taxpayers who pay the BO tax, or about one-fifth of all businesses.
It also sets aside $300 million over two years for public colleges and universities, making targeted investments to boost high-demand fields such as computer science, engineering and health care, and providing what the Legislature calls “foundational support” to recession-proof the state’s colleges and universities.
UW President Ana Mari Cauce said the legislation is a huge win — not only because it eliminates the financial-aid wait list, but because it will allow the university to better weather financial downturns. “We talked about the importance of this being the year for higher education, and I think the Legislature did that,” she said.
States have become laboratories for experiments with “free” college, said Jenna Sablan, assistant research professor at Georgetown University’s Center on Education and the Workforce. Programs range from Tennessee’s free community college promise to New York’s Excelsior Scholarship, which gives free tuition to the state’s two- and four-year public college system for families who make $125,000 or less.
Sablan said the Washington program seems to most closely resemble the Excelsior Scholarship. But the New York program requires students to go to college full-time, and if they move out of state, the scholarship may be converted into a loan.
The Washington program does not have those features. Students whose families make $50,000 or less for a family of four can go to a two- or four-year public college in Washington tuition-free, and students whose families make up to the median income — nearly $92,000 for a family of four— will also get some aid.
With the additional funding, Washington will spend $845 million over the 2019-2021 biennium for financial aid. It may be “the most generous-promise financial aid program in the country” — not just because of the award amounts, but also because of the different ways the money can be used, said Rachelle Sharpe, deputy executive director of the Washington Student Achievement Council, which oversees financial aid.
For example: The grant aid can be used by any Washington resident who qualifies, who doesn’t already have a bachelor’s degree, and who wants to earn something less than a full degree (such as a certificate) at a community college. It can be used at 66 schools in Washington (including many of the state’s private universities) and allows students to go part-time. It also covers apprenticeships.
“I’m not aware of any other state that’s done what we’ve done,” said state Rep. Drew Hansen, D-Bainbridge, who sponsored the bill. The act creates a new account, the Workforce Education Investment Account, that may only be used for higher education programs, operations, compensation and state-funded student aid programs.
The bill was opposed by the Washington Retail Association and the Independent Business Association of Washington, as well as independent physician clinics. They argued it would lead to increased costs and make it difficult for rural doctors to stay in business. It passed largely along party lines.
Although the Department of Revenue can’t release information on how much individual businesses will pay, it appears that only two companies, Microsoft and Amazon, fit the description of the highest BO tax rate category of 2.5 percent (select advanced computing businesses with worldwide revenue that exce $100 billion).
But the bill also limits their total tax to between $4 million and $7 million per year — meaning the two companies will contribute between 2 percent and 3.6 percent of the total $380 million in revenue the tax increase will raise over the first two years. Both companies declined to say exactly how much they would pay, while also pointing out they have contributed to higher education in Washington in other ways.
Earlier this year, in a Seattle Times Op-Ed supporting the measure, Microsoft President Brad Smith and two co-authors, including Cauce, wrote that tech companies should pay “a bit more” because they benefit from a highly-educated workforce. Amazon later endorsed the bill as well.Goodbye wait list
Washington’s 50-year-old State Need Grant has long been one of the nation’s most generous financial-aid programs. But it also ran out of money every year. This year, about 92,000 students got money — and another 18,000 qualified students got none.
The new bill replaces the State Need Grant with the more generous Washington College Grant in fall 2020. It is an entitlement, a guarantee that students whose family income meets the threshold will get the full amount to pay for tuition and fees if they plan to attend a state public school, and a portion of tuition if they attend one of the state’s accredited private colleges or universities.
“It’s just almost jaw-dropping,” said Sharpe, who has worked on financial aid issues for 22 years.
The guarantee “is huge,” agreed Mary Jean Ryan, executive director of Community Center for Education Results, a nonprofit that works with South King County school districts. “Eligible students and families can now count on assistance for college.”
If the plan were in place today, it would give a UW undergraduate student who qualified $11,207, the cost this year of in-state tuition and required fees. Currently, the maximum State Need Grant award for a UW student is $9,745.
In addition, that student also would likely qualify for a federal Pell Grant, which would provide another $5,000, Sharpe said.
The law also extends smaller amounts of grant aid to students whose families make up to the median income, or nearly $92,000 a year for a family of four. For many families in rural areas, where income levels are below the median, it is in effect a promise of either free or reduced tuition, Hansen said.
The graduated aid will be especially helpful for students whose families make just slightly more than the old financial aid cutoff. Those students often can’t take out enough in loan money to bridge the cost, leaving college just out of reach, Sharpe said.
Paying for true costs
Of course, tuition isn’t the only cost. UW officials say a student living at home will need an additional $8,000 to pay for food, transportation and other expenses; a student living on campus will need an additional $16,500 for housing, food, transportation and other expenses. One of the criticisms of “free college” plans is that they don’t account for all expenses. But because this plan isn’t a so-called “last-dollar scholarship,” students who qualify will still get Pell money, bringing their financial aid package closer to the true cost of college.
It also gets around another criticism of free college: That most of the money goes to the middle class, since low-income students already qualify for aid. That was one of the arguments against Seattle Promise, part of a levy approved by voters in November that lets all future Seattle public high school students go to one of the city’s three community colleges for free. (The Washington College Grant will likely slightly lower the cost for Seattle taxpayers, since more money will be available from the state for students who qualify.)
The State Need Grant and a related state program called College Bound has made college possible for many Washington students, including Daniela Suarez, who grew up in Olympia and is now a junior at the University of Washington.
Suarez said she feared she’d never be able to get a degree because her parents didn’t make enough money to pay for tuition. But Suarez’s high-school counselor told her she qualified for the State Need Grant and other forms of aid, which allowed her to attend South Puget Sound Community College as a jumping-off point to the UW.
She said, “Before then, I had no hope.”