Colorado will ease path to college by paying back 2 years of tuition for lower-income students

Colorado students whose families make $90,000 a year or less would be eligible to be reimbursed for two years of in-state tuition at public four-year universities, community colleges and technical schools under a bill awaiting Gov. Jared Polis’ signature.

Supporters of the legislation — HB24-1340, passed on the final day of the session — tout it as an important step to improve access to postsecondary education in Colorado. House Speaker Julie McCluskie previously called the bill “the sleeper of the session.”

“We know the cost of college has been an obstacle for students for many, many years,” said Angie Paccione, executive director of the Colorado Department of Higher Education. “If it’s not an actual barrier, it’s a perceived barrier. This is a way to eliminate that perception and to really make it affordable.”

But since many of the state’s higher education institutions already have programs that cover tuition for low-income families — typically those making below $60,000 to $70,000 a year — supporters of the bipartisan measure say it should particularly help middle-income families earning closer to that $90,000-a-year cutoff.

“I hope that people understand our state used to be a place where we were able to invest more to hold tuition costs down,” said Rep. Shannon Bird, a Westminster Democrat who was one of the bill’s sponsors. “With competing pressures on budget and TABOR, that has taken away our ability to fund higher education the way we used to.

However, the bill differs from the typical tuition promise programs that many Colorado colleges already offer to low-income students. The new legislation will reimburse families through a refundable state income tax credit, meaning eligible students must pay tuition and fees on their own and then receive refunds after the next tax season.

Some local education experts warned the retroactive payment would still hinder struggling families in affording college if they have to come up with the money upfront.

Legislative sponsors and state higher education leaders said the bill is a boon for middle-income families who may make too much to qualify for significant financial aid but are still burdened by the cost of degree or certificate attainment.

“This is a way to lift up more of our families,” Bird said.

Polis is expected to sign the bill, according to a statement from the governor’s office on Friday. “I’m so excited that community college will now be free for all families under $90,000, this is a big step forward for saving people money on tuition,” Polis said.

To qualify for the tax credit, students must:

• Have a household adjusted gross income of $90,000 or less
• Enroll in an in-state public college, university or technical college within two years of graduating from a Colorado high school
• Seek a degree or credential
• Submit a Free Application for Federal Student Aid or a Colorado Application for State Financial Aid
• Complete at least six credits for the applicable semesters
• Maintain a 2.5 GPA for the applicable semesters

Students can claim up to 65 credit hours across all years the tax credit is used. The credit is expected to average $2,700 for students at four-year colleges, $2,000 for students at area technical colleges and $1,000 for students at two-year colleges, according to the bill’s fiscal note.

Eligible students can begin claiming the credit in the 2025 tax year.

About 28,000 students in Colorado would have met the requirements for the tax credit during the 2023-24 school year, according to data from the Colorado Department of Higher Education.

The tax credit is expected to cost $36.7 million in 2025-26, Bird said. In years the state collects tax dollars exceeding the cap set by the Taxpayers Bills of Rights, the credit would be paid out of that tax revenue. In years where the state comes in beneath the TABOR cap, the money would come from the general fund, Bird said.

If students receive scholarships or grants, the tax credit would only apply toward any gap left between those and full payment of tuition fees.

“The Colorado paradox”

The rate of Colorado high schoolers going to college was 49.9% in 2021, more than 10% lower than the national average, according to the U.S. Bureau of Labor Statistics. Twenty-nine percent of Colorado high school graduates enrolled in a college or university outside of the state, according to a 2023 report from the state higher education department — a 4% increase and the highest rate ever.

This is what experts refer to as “the Colorado paradox”: Colorado has the highest educational attainment levels of any state in the country with 62.9% of the population aged 25 to 64 having some form of a postsecondary credential, according to the state.

However, Colorado is far below the national average in getting its own residents to enroll in in-state postsecondary education, graduate and stay here.

“We want to grow our own and make sure our Colorado kids are prepared,” Paccione said.

Higher education has proven to provide graduates with not only better career and economic outcomes, but better health and quality of life, as well.

College graduates in the United States earn about $1 million more on average throughout their working years than people without postsecondary degrees, according to 2024 Gallup poll research. The average bachelor’s degree graduate will earn double what the average person without a degree earns in their lifetime, according to data from the U.S. Department of Health and Human Services.

College graduates report better health outcomes than those who only graduated high school, the Gallup research found, with 60% of people with bachelor’s degree describing their health as either “excellent” or “very good,” compared to 43% of respondents without a higher education.

“We want to make sure students see the value of going to college,” Paccione said. “This helps get them there.”

“A potential win” for students

Larry Pakowski is vice president for student engagement, inclusion and success at Aims Community College, which has multiple locations in northern Colorado. Pakowski said Aims anticipates the tax credit will impact middle-income families most since low-income students at Aims tend to have their costs covered by financial aid.

“For a ton of our students, the good news is their costs are already covered, but for those middle-income that don’t qualify for a Pell grant, that’s a potential win for them in terms of the affordability piece,” Pakowski said.

Nathan Cadena, chief impact officer at the nonprofit Denver Scholarship Foundation, which guides Denver students toward postsecondary degrees or certificates and supports them during their higher education journey, said any state investment in higher education is a positive step.

But he’s not sure how impactful this tax credit will be for the lower-income, first-generation college students that the scholarship fund often assists.

First, Cadena said explaining the mechanics of a retroactive tax credit to a family can be tricky messaging, not to mention that struggling families would still need to pay the tuition and fees upfront before getting their refund as part of the next year’s tax filing.

Then, he said, it’s important to recognize that taking care of tuition and fees obviously lightens the load of collegiate financial barriers, but costs like room and board, as well as books and supplies, are still big barriers to access.