Education Voters Pennsylvania

Issues

Pennsylvania Tuition Relief:  Frequently Asked Questions

Q. Why should the Legislature pass Tuition Relief this spring?

A. Pennsylvania families are facing a financial emergency as a result of the national recession.  In the coming months, parents will be making the final decision about whether they can afford to send their high school seniors to college in the fall.  Adults who lose their job will be figuring out whether they can find the money to go back to school and complete their own degree to improve their odds in the workforce.  These Pennsylvanians need to know that the Commonwealth is moving forward on plans to get Tuition Relief into their hands when classes start this Fall.  The sooner the General Assembly enacts the Tuition Relief Act, the more quickly video lottery can be up and running and benefiting Pennsylvania.

Q. How does the plan work?

A. Like this:

  1. Over 170,000 students at our public colleges and universities – the State System of Higher Education and the 14 community colleges – will benefit when the program is fully in place.  Plus, an additional 10,000 students will be able to go to college who otherwise could not afford it or will stay in-state instead of leaving Pennsylvania.
  2. Everyone pays something – but what they can afford.  We will eliminate the gap between what families can afford to pay and what they are forced to pay – often by borrowing tens of thousands of dollars.
  3. Many families earning under about $32,000 a year will pay just $1,000 a year for tuition, fees, room, board and books at the State System. 
  4. All other families that qualify for PHEAA grants will receive at least $4,000 in additional grants at State System universities – equal to 75% of the cost of tuition – and in many cases far more, up to $7,600 in emergency relief.
  5. For example, a family that earns $45,000 will save 77% if they send their child to a State System university, and will pay l5% less if they enroll their child in a local community college.
  6. For a family that earns about $75,000 a year, going to the State System will cost 35% less and attending a local community college will mean paying 28% less.
  7. Families that do not qualify for PHEAA grants but who earn under $100,000 a year will also benefit – more than doubling the number of State System students receiving state-funded financial aid grants.  These families will receive a grant for half the cost of tuition – about $2,700 in savings at the State System.

Q. Why Are State-Owned Universities the only 4-year colleges that are included?

A. The PA State System of Higher Education is the only place where the Commonwealth has control over tuition hikes – and those controls are working to keep tuition down.

  • In 5 of the last 6 years, tuition increases at the State System have been below the rate of inflation.
  • Tuition has risen dramatically over the past decade at the state-related universities—2% above inflation. Likewise the private institutions have increased their tuition at a rate faster than inflation.
  • In contrast, tuition increases at PASSHE and CCs have kept their increases 1% below the rate of inflation during the same time period.
  • A decade ago, about $2,400 separated the tuition charged by the state universities and the state-relateds.  The difference is now greater than $7,400.
  • The greatest accountability for taxpayers is to build on the efficiencies achieved in the State System.

In addition, video lottery is projected to generate enough revenue to make college debt-free at the State System and the community colleges – not at the state-relateds and independent universities as well.  Expanding the number of institutions without adding an additional revenue source would mean that families would still have to take on thousands of dollars in debt.

  • It would cost another $500 million to cover state-related university students
  • It would cost close to $2 billion if all sectors (including privates) are included.

Q. Why not let all students compete for the money, like the PHEAA grant program?

A. This program builds on the existing PHEAA grant program.  Students in all higher education sectors will still receive their PHEAA grant.  But the best way to make college affordable for hard-working Pennsylvanians is to concentrate the additional resources from video lottery terminals to eliminate the need to take on debt at our public higher education institutions.

PASSHE institutions and community colleges enroll more low-income students, they cost less, and the state is in a better position to moderate future tuition increases.

Q. Is tuition higher at the state-related institutions because the state doesn’t do enough to support them?

A. No

  • The state contributed nearly $1 billion in 2007 in direct support to Penn State, Pitt, Temple and Lincoln Universities and support for students who are attending those universities.
  • In the same year, the state contributed $361 million to support private institutions and the students who attend them.
  • Community colleges received: $264,021,927
  • PASSHE: $619,490,710
  • In addition, state-related institutions will receive significant assistance in this year’s proposed budget – despite the national recession:
  • Penn State, Temple, Pitt and Lincoln are held harmless at this year’s appropriation level – with the cut proposed in February restored as a result of the federal stimulus package – and given $100 million in funding for capital projects
  • State funding for PHEAA grants will increase by $35 million to protect the grants that 174,624 students at public, state-related and private institutions receive from cuts made by PHEAA this year
  • This Administration and the General Assembly have worked together to provide $2 billion to Penn State alone over the last six years:
    • Annual operating funding that reached over $250 million this year
    • Annual PHEAA grants that reached over $70 million last year
    • $40 million a year for capital projects
    • $49 million in additional capital funding in 2004-05
    • $37 million in funding for specific construction projects

Penn State has received an additional $371 million over the last six years in new funding, more student aid and construction projects.

Q. Under what conditions could the state-relateds be included in Tuition Relief?

A.

  1. State-relateds would need to agree to reasonable tuition controls;
  2. State-relateds must agree to become more accountable to the state; and
  3. We have to find an additional revenue source to fund the expansion.

Q. Why is Tuition Relief the right investment with the proceeds from video lottery?

A. Investing in higher education and encouraging more students to attend college is the key to economic recovery in Pennsylvania:

  • Today the unemployment rate is 8% for Pennsylvanians with a college degree versus 4% for those who never attended college.
  • For every dollar invested in a college student the government receives $7.46.
  • College graduates, who earn twice as much as a high school graduate over the course of a lifetime—nearly $1 million more—pump those dollars back into the economy.
  • Students will graduate from college free of the crushing burden of excessive student loans.
  • More hard-working families will realize that college is a real possibility for their children.
  • Adults who have lost their jobs will know that going back to college to increase their skills and gain new credentials is a real option. 
  • Our economy will benefit, as Pennsylvania’s workforce becomes stocked with well-educated Pennsylvanians who can help us draw the high-tech, high-paying jobs we need.

The benefits go beyond greater earnings. Compared to those who have not graduated from college, college graduates:

  • are less likely to depend on social welfare programs,
  • are far more likely to have adequate health coverage,
  • are less likely to commit a crime, and
  • are more likely to have improved health status.

These outcomes result in greater economic activity, lower government spending, and increased government revenue.

Q. Why does Tuition Relief start with just next year’s incoming freshman class?

A. It will take several years for video lottery to reach its full revenue potential.  Just as PHEAA started with one year of students at a time, the Tuition Relief Act will begin with next year’s freshman and then grow by one class per year until all students are covered.

If we had enough resources, we would be happy to cover all students immediately.

Given the national economic crisis, it is critical that graduating high school students make the leap to higher education.  The Tuition Relief Act will achieve that goal.

Q. Does Senator Piccola’s bill do the same thing as the Tuition Relief Act?

A. Senator Piccola and other legislators deserve credit for drawing attention to the urgent need for tuition relief.  Senator Piccola’s bill includes a number of good ideas – such as tuition control on all participating institutions and accountability for students and higher eds.  However, the legislation does not provide enough resources to make college affordable and it relies on funding streams that are already serving important economic development and other vital purposes.

Q. Who is eligible to have video lottery license?

A. Bars, restaurants, hotels, clubs, or other eating places with valid liquor licenses are eligible to apply for a video lottery license.  Large grocery stores, gas stations which sell alcohol, and stop-and-go establishments will not be eligible for a license.

Q. Will these establishments automatically get a license?

A. No. Any eligible establishment seeking a license must have a current and valid liquor license.  In addition, all applications for a video lottery license must go be approved by the Department of Revenue, which will examine a number of factors, including the experience, character and general fitness of the applicant. 

Q. Are there criminal background checks of applicants?

A. Yes.  Criminal background checks are required to obtain and maintain a valid liquor license.  Any entity with a video lottery license must at all times have a valid liquor license.

Q. Will there be enforcement to make sure that only those with valid video lottery licenses operate machines?

A. Yes.  Pennsylvania State Police, through its Liquor Control Enforcement Officers, will have the power and authority to cite any establishment or individual violating any laws in this Act.  Criminal violations of the Act may constitute a second degree felony and carry a mandatory minimum $15,000 fine.  Illegal machines may be seized and ultimately forfeited.  Violations also carry civil penalties, which require an Administrative Law Judge to suspend the establishment’s liquor license for no less than 7 consecutive days for a first violation, and 14 consecutive days for any subsequent violation

Q. Who will benefit from Tuition Relief?

A. Pennsylvania families who are sending their children to a public college or university and adults who are going back to school at public institutions of higher education will receive tuition relief under this bill.  Families earning up to $100,000 a year will qualify, and the student can attend a community college or one of the 14 Pennsylvania State System of Higher Education universities.

Q: Isn’t the Tuition Relief Act an expansion of gambling?

A: No.  Video poker already exists throughout the Commonwealth – but it is illegal and the taxpayers are not benefiting from its revenue.  Studies by the Pennsylvania State Police and independent researchers indicate that the number of illegal machines currently in bars and private clubs is at least 17,000 and likely 36,000 or more. 

Analysis conducted by a university professor more than four years ago concluded that “there is already widespread illegal gambling on ‘slot type devices’ (video poker machines and slot machines) found in thousands of bars and social clubs across the Commonwealth, which have been in place for more than twenty-five years and currently generate more than a billion dollars annually in profits for the bars, clubs and the vendors that supply the machines.”

These findings are corroborated by the Pennsylvania State Police, which notes that seizure of illegal video gaming devices (VGDs) by law enforcement does little to stop the popularity of this illegal activity, since establishments and vendors simply replace seized devices with new ones.  In 2008, the State Police seized 537 illegal VGDs from establishments that sell liquor in the Commonwealth.  The State Police is currently in possession of over 2,600 illegal VGDs being stored in property rooms across the state.

Q:  Won’t legalizing video poker hurt Lottery revenue?

A: No. This is the same argument used by opponents of providing property tax relief through slot machines – and it was proven wrong.

The first slot machine parlor opened in November 2006.  During the prior year, the Pennsylvania Lottery had $3.07 billion in sales and made a profit of $914 million.  In the year the first slots parlors opened, Lottery sales and profits both rose.  This year, Lottery sales are projected to reach nearly $3.2 billion, with anticipated profits of $964 million – a 6% increase from before legalized slot machines.

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The independent Legislative Budget & Finance Committee’s most recent annual study on this issue found that average monthly Lottery sales increased in the “post-slots” period compared to “pre-slots” activity.  The average monthly sales in 2007 and 2008 showed a 4% increase compared to 2005 and 2006: from $247.2 million to $257.7 million.  The LBFC report also stated: “Despite the ongoing and substantial increase in wagering activity at Pennsylvania slots facilities, a declining economy, and diminished consumer confidence, the Pennsylvania Lottery had another record sales year in FY2007-08.”

Opponents of Tuition Relief point to the impact on Lottery sales in the counties closest to the new gaming venues.  However, in each of the last two years, Lottery sales have been mixed in the home counties themselves – with two of the seven home counties actually showing an increase in Lottery sales.  And the counties that are adjacent to Pennsylvania’s casino home counties actually show a 1.4% increase in Lottery sales – which is double the statewide average. 

Q: Won’t Tuition Relief take money away from senior citizen programs?

A: The best evidence that legalizing video lottery terminals in bars, taverns, restaurants and private clubs will not hurt traditional Lottery contributions towards senior programs and services comes from the experience following the opening of Pennsylvania’s casinos: funding for programs benefiting older Pennsylvanians rose from $892 million in the year before the first slots parlor opened to an estimated $1.2 billion this year – a 31% increase.

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The LBFC study explains why the ability to generate revenue for programs benefiting older Pennsylvanians would not be damaged by enacting Tuition Relief: “The Lottery’s continued strong performance in the face of stiff competition from the slots industry for discretionary gaming dollars did not occur without considerable pre-planning and ongoing efforts….  Lottery officials have continued to address the challenges posed by slots gaming through expansion of the retailer network and the maintenance of a sound marketing plan that has provided for a series of strategically-timed game modifications and point-of-sale system upgrades.”

The Tuition Relief Act shows continued support for expansion of the Lottery network by enabling the Lottery to mandate traditional terminals in venues that are approved to offer the new video gaming.

In addition, experts and retailers from other states indicate that the traditional Lottery and video lottery terminals cater to different segments of the market.  One article from North Carolina quoted a retailer as explaining that: “They can co-exist very well.  They’re two different customers, two different kinds of players.” The article also cited an industry representative’s conclusion that “the amusement machine industry could help the lottery be even more successful.”