SB2995

Regular Session

Relating to the displacement of student financial aid at a public institution of higher education.

ModeratePlan for compliance

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Higher Education Coordinating Board

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025 (or immediately upon Governor's signature if passed by 2/3 vote).
Compliance Deadline: Immediate/Retroactive. The law applies to the 2025-2026 academic year. Since application cycles for the 2025-2026 year typically open as early as July or August 2025, your current application portals may already be non-compliant if the law receives immediate effect.
Agency Rulemaking: The Texas Higher Education Coordinating Board (THECB) must adopt rules, establish the standardized "Advisory" text, and publish a list of common reasons for displacement. You cannot finalize your forms until THECB releases this text.

Immediate Action Plan

IT Audit: Immediately test your admission portal's ability to render a text box with a 1-point border and 14-point font.
Draft Internal Content: Have Legal and Financial Aid draft the "Maximization" and "Protection" strategy text immediately; do not wait for THECB rules for this specific section.
Monitor THECB: Assign a compliance officer to check the Texas Register daily for the release of the official "Advisory" text and the "List of Common Reasons."
Vendor Notice: Put your application platform vendors on notice today that these changes are statutory requirements for Texas operations.

Operational Changes Required

Contracts

CRM & Application Vendors: Review contracts with third-party application platforms (e.g., Slate, Common App, ApplyTexas). You must verify their ability to insert a text box with a 1-point weight border and 14-point font within the application flow. If the vendor cannot accommodate this specific formatting, you are legally exposed.

Hiring/Training

Designated Point of Contact: The law requires the application to list a specific office or employee to assist students with displacement questions. Financial Aid staff must be trained on "maximization strategies" to field these inquiries competently.

Reporting & Record-Keeping

Admission Application Overhaul: The application form (digital or paper) must now include:
1. The THECB-mandated "Financial Aid Displacement Advisory" (in 14pt font/border).
2. Plain language instructions on how to apply for private aid.
3. Deadlines for reporting private scholarships.
4. Strategies for maximizing gift aid and preventing displacement.

Fees & Costs

IT Development: Budget for immediate front-end development hours to modify application portals.
No State Fees: There are no new filing fees payable to the state.

Strategic Ambiguities & Considerations

The "Gap" Period: The law applies to the 2025-2026 academic year, but THECB may not publish the required text until late summer 2025. Institutions risk having open application portals without the required text.
"Plain Language" Standard: The statute requires "plain language" recommendations for maximizing aid but does not define the standard. Institutions should draft this internally now, aiming for an 8th-grade reading level, rather than waiting for agency guidance.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsEducation Education--higher Education--higher--student Financial Aid Scholarships Higher Education Coordinating Board, Texas

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 2995
89R12046 RDR-Dp	By: West
	Education K-16
	4/30/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Financial aid displacement occurs when a student receives combined state-based financial aid (e.g., TEXAS Grant) and private gift aid in amounts that exceed their demonstrated financial need and, as a result, has their state-based financial aid reduced. This practice is authorized under Section 56.307, Education Code, in regards to TEXAS Grants, and is required under 19 TAC Rule Section 22.11(d).

Financial aid displacement is widespread and can have severe financial impacts on individual students; across the seven higher education systems in Texas this practice affected over 1,800 students who had their TEXAS Grants reduced, on average, by $2,277. Institutions currently provide students notice of this practice, but this information is often nested in "terms & conditions" forms or "financial responsibility" statements on the institution's website that are inaccessible to students, especially those that are first-generation. Additionally, each institution provides this information to students at different points during the financial aid process and provides vastly different information.

Texas students deserve timely, uniform, and comprehensive information regarding financial aid displacement. Legislation increasing transparency for students is required to ensure young Texans can navigate the financial aid process with the security of mind knowing all of the facts are right in front of them.

The committee substitute for S.B. 2995 will require the Texas Higher Education Coordinating Board (THECB) to promulgate a uniform financial aid displacement notice that will include a prescribed message that informs students of this practice and advises them to reach out to institutions to seek more information. It will also include a list of the most common causes of financial aid displacement.

Institutions will be required to include on their applications the financial aid displacement notice promulgated by THECB and additional information relating to: financial aid processes at the institution, timelines for the financial aid process, and recommended best practices for students to maximize their financial aid while ensuring they are prepared for financial aid displacement.

As proposed, S.B. 2995 amends current law relating to the displacement of student financial aid at a public institution of higher education.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Higher Education Coordinating Board in SECTION 1 (Section 56.0094, Education Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter A, Chapter 56, Education Code, by adding Section 56.0094, as follows:

Sec. 56.0094. FINANCIAL AID DISPLACEMENT. (a) Defines "coordinating board" and "gift aid."

(b) Requires the Texas Higher Education Coordinating Board (THECB) to develop a financial aid displacement advisory for use by institutions of higher education under this section that contains a statement bordered by a line one point in weight in a font not less than 14 points in size in a certain form and a list of the reasons for which the amount of gift aid a student is awarded might be revised or reduced under Chapter 56 (Student Financial Assistance). Sets forth the required language of the statement.

(c) Requires an institution of higher education to send the financial aid displacement advisory developed under Subsection (b) to a student not later than the seventh day after the date on which the student is admitted to the institution. Authorizes the advisory to be sent by text message, e-mail, or mail.

(d) Requires an institution of higher education, not earlier than the 30th day before or later than the 30th day after the institution revises or reduces the amount of gift aid a student will receive under this chapter for a school year, to send to the student a financial aid reduction notice identifying the gift aid that will be or has been revised or reduced, the amount by which the gift aid will be or has been revised or reduced, and the reason the gift aid will be or has been revised or reduced.

(e) Requires an institution of higher education to annually report to THECB in a manner provided by THECB rule a report on the revision or reduction of gift aid at the institution under this chapter during the preceding academic year. Requires that the report include certain information, disaggregated by race and sex.

(f) Requires THECB to annually submit to the legislature and post on THECB's Internet website a report on the revision or reduction of gift aid under this chapter during the preceding academic year. Requires that the report include certain information, disaggregated by race and sex.

(g) Requires THECB to adopt rules necessary to implement this section.

SECTION 2. Provides that Section 56.0094, Education Code, as added by this Act, applies beginning with the 2025�2026 academic year.

SECTION 3. Effective date: upon passage or September 1, 2025.

Senate Authors

Sen. Royce WestDemocrat · Primary Author

Coauthors (1)

Jose Menendez (D)

House Sponsor

Rep. Aicha DavisDemocrat · Primary Sponsor

Bill Text(with markup)

S.B. No. 2995

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the displacement of student financial aid at a public
	institution of higher education.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter A, Chapter 56, Education Code, is
	amended by adding Section 56.0094 to read as follows:
	Sec. 56.0094. FINANCIAL AID DISPLACEMENT. (a) In this
	section:
	(1) "Coordinating board" means the Texas Higher
	Education Coordinating Board.
	(2) "Gift aid" means a grant, scholarship, exemption,
	waiver, or other financial aid awarded to a student without a
	requirement to repay the aid or earn the aid through work.
	(b) The coordinating board shall develop a financial aid
	displacement advisory for use by institutions of higher education
	under this section that contains:
	(1) a statement bordered by a line one point in weight
	in a font not less than 14 points in size in the following form:
	"Financial aid displacement occurs when a student's
	financial aid is reduced due to receipt of a private scholarship or
	other reasons identified in this advisory. This practice occurs in
	Texas and should be taken into consideration while applying for
	financial aid. The institution to which you are applying is
	providing in this application a list of recommendations describing
	how to maximize your financial aid and ensure that you are prepared
	when financial aid displacement occurs. You are encouraged to
	reach out to the institution to which you are applying to receive
	advice on how to avoid financial aid displacement."; and
	(2) a list of the most common reasons, as identified by
	the coordinating board, for which the amount of gift aid awarded may
	be revised or reduced under this chapter.
	(c) Each institution of higher education shall include in
	the institution's admission application form or provide in the
	institution's admission application form a link to the financial
	aid displacement advisory developed under Subsection (b) and, in
	plain language:
	(1) how to apply for gift aid at the institution;
	(2) the timeline for financial aid processes at the
	institution, including application deadlines, suggested deadlines
	to report gift aid, and other deadlines of which the institution
	determines a prospective student should be made aware;
	(3) a list of recommendations to aid a prospective
	student in maximizing gift aid awards, as determined by the
	institution;
	(4) a list of recommendations for a prospective
	student to ensure the student's gift aid will not be reduced; and
	(5) contact information for an employee or office at
	the institution from whom a prospective student may seek advice
	regarding gift aid.
	(d) The coordinating board shall adopt rules necessary to
	implement this section.
	SECTION 2. Section 56.0094, Education Code, as added by
	this Act, applies beginning with the 2025-2026 academic year.
	SECTION 3. This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 30, 2025

TO:	Honorable Brandon Creighton, Chair, Senate Committee on Education K-16

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB2995 by West (Relating to the displacement of student financial aid at a public institution of higher education.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

710 Texas A&M University System Administrative and General Offices, 717 Texas Southern University, 719 Texas State Technical College System Administration, 720 The University of Texas System Administration, 758 Texas State University System, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 775 Texas Woman's University System, 781 Higher Education Coordinating Board, 783 University of Houston System Administration, 966 Howard College, 978 San Jacinto College

LBB Staff:

JMc, FV, LBO, GO

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Frequently Asked Questions

Common questions about SB2995

What does Texas SB2995 do?

SB2995 mandates that all Texas public institutions of higher education explicitly disclose "financial aid displacement" practices directly on admission application forms. This requires immediate IT and operational updates to application portals to accommodate strict formatting requirements (14-point font, specific borders) and new advisory language prior to the 2025-2026 application cycle. Implementation Timeline Effective Date: September 1, 2025 (or immediately upon Governor's signature if passed by 2/3 vote).

Who authored SB2995?

SB2995 was authored by Texas Senator Royce West during the Regular Session.

When was SB2995 signed into law?

SB2995 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB2995?

SB2995 is enforced by Texas Higher Education Coordinating Board.

How urgent is compliance with SB2995?

The compliance urgency for SB2995 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB2995?

The cost impact of SB2995 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB2995 address?

SB2995 addresses topics including education, education--higher, education--higher--student financial aid, scholarships and higher education coordinating board, texas.

Legislative data provided by LegiScanLast updated: November 25, 2025

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