Education, Higher

Plain English Breakdown

The bill's summary does not provide detailed information on how THEC will measure positive growth in graduation rates.

Higher Education Commission Changes and Tuition Rules

This act changes how members of the Tennessee Higher Education Commission (THEC) are appointed, sets new rules for tuition increases based on graduation rates, limits online course fees, and requires boards to use out-of-state student fees to help in-state students.

What This Bill Does

• Changes how members of the Tennessee Higher Education Commission (THEC) are chosen by dividing appointments among the governor, senate speaker, and house speaker.
• Requires THEC to set target graduation rates for each public higher education institution and publish them every five years.
• Limits when THEC can approve separate tuition increases for specific institutions based on their progress in improving graduation rates.
• Prohibits public universities from charging more than 75% extra for online courses compared to similar in-person courses, unless an in-person option is available.
• Requires university boards to create policies using out-of-state student fees to help reduce costs for in-state students.

Who It Names or Affects

• The Tennessee Higher Education Commission (THEC) and its members
• Public higher education institutions in Tennessee
• Students attending these institutions

Terms To Know

Tennessee Higher Education Commission (THEC)

A group that oversees public higher education in Tennessee, making decisions about funding and policies.

Outcomes-based funding formula

A method used to distribute money based on the performance or outcomes of educational institutions.

Limits and Unknowns

• The bill does not specify how THEC will measure positive growth in graduation rates.
• It is unclear what specific actions university boards must take with out-of-state student fees.
• Some provisions may be delayed until July 1, 2026.

Official Summary Text

Under present law, the Tennessee higher education commission (THEC) includes 10 appointed members as follows: six gubernatorial appointees, one student member appointed by the governor, one appointee of the speaker of each chamber of the general assembl
y, and one member who is jointly appointed by both speakers. Beginning on the date that this bill becomes a law, this bill revises the appointing authority for THEC to be as follows:

(1) Three gubernatorial appointees, plus the student member appointed by the governor;

(2) The speaker of the senate shall appoint three members, one of whom must be appointed as the successor to the member presently appointed from the middle grand division by the governor), whose term expires on June 30, 2030, and one of whom must be app
ointed as the successor to the member presently appointed from the west grand division jointly by both speakers, whose term expires on June 30, 2026; and

(3) The speaker of the house of representatives shall appoint three members, one of whom must be appointed as the successor to the member presently appointed from the middle grand division by the governor whose term expires on June 30, 2026, and one of
whom must be appointed as the successor to the member presently appointed from the east grand division by the governor whose term expires on June 30, 2031.

Present law requires THEC to develop and utilize an outcomes-based funding formula model to ensure the fair and equitable distribution and use of public funds among state institutions of higher education. This bill adds a requirement that THEC establish
a means of using inputs into the outcomes-based funding formula model to establish target on-time graduation rates for each state institution of higher education and publish the target rates at least once every five years. The full text of this bill def
in
es "on-time graduation."

Present law requires THEC to annually review tuition and other institutional fees charged to students attending state institutions of higher education and approve a maximum allowable tuition and fee increase policy binding upon all public institutions of
higher education. Present law authorizes THEC to approve separate maximum allowable tuition and fee increases for one or more public institutions of higher education that differ from the general tuition and fee policy if THEC determines that a separate
tu
ition and fee policy for an institution is necessary based on the circumstances or needs of the respective institution. This bill adds that, in order for THEC to approve a separate maximum allowable tuition and fee increases, THEC must also determine tha
t the institution has demonstrated positive growth in the institution's on-time graduation rate calculated on a three-year rolling average.

This bill prohibits a public institution of higher education from charging students tuition and fees for an online undergraduate course that, in total, exceeds the total tuition and fees charged to students for a comparable undergraduate course offered i
n person at the institution by 75% or more if the institution does not offer an in-person course option that satisfies the same course credit as the online course.

This bill requires the board of trustees for the University of Tennessee, the board of regents, and each state university board to adopt and implement (by July 1, 2026) a policy regarding the use of revenues generated by the out-of-state undergraduate tu
ition and fees charged by the institutions governed by the respective board. The policy must describe the board's utilization plan for revenues derived from such tuition and fees and how those revenues may be used to mitigate the tuition and fee costs fo
r
in-state undergraduate students.

ON MARCH 30, 2026, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 2079, AS AMENDED.

AMENDMENT #1 makes the following changes:



Changes from three years to two years the time for "on-time graduation" for students enrolled in a community college governed by the Tennessee board of regents.


Removes the provision that prohibits a public institution of higher education from charging
students tuition and fees for an online undergraduate course that, in total, exceeds the total tuition and fees charged to students for a comparable undergraduate course offered in person at the institution by 75%

or more if the institution does not offer an in-person course option that satisfies the same course credit as the online course.

Current Bill Text

HOUSE BILL 1833
By Cepicky

SENATE BILL 2079
By Watson
SB2079
010869
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 49,
Chapter 14; Title 49, Chapter 7; Title 49, Chapter
8 and Title 49, Chapter 9, relative to higher
education.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 49-7-204(a)(1)(B), is amended by
designating the subdivision as subdivision (a)(1)(B)(i) and adding the following as a new
subdivision:
(ii) Beginning on the effective date of this act:
(a) The governor shall appoint three (3) voting members;
(b) The speaker of the senate shall appoint three (3) voting members,
one (1) of whom must be appointed as the successor to the voting member
appointed from the middle grand division by the governor pursuant to subdivision
(a)(1)(B)(i), whose term expires on June 30, 2030, and one (1) of whom must be
appointed as the successor to the voting member appointed from the west grand
division by the speaker of the senate and speaker of house of representatives
pursuant to subdivision (a)(1)(B)(i), whose term expires on June 30, 2026; and
(c) The speaker of the house of representatives shall appoint three (3)
voting members, one (1) of whom must be appointed as the successor to the
voting member appointed from the middle grand division by the governor
pursuant to subdivision (a)(1)(B)(i), whose term expires on June 30, 2026, and
one (1) of whom must be appointed as the successor to the voting member
appointed from the east grand division by the governor pursuant to subdivision
(a)(1)(B)(i), whose term expires on June 30, 2031.

- 2 - 010869

SECTION 2. Tennessee Code Annotated, Section 49-7-204(b)(1), is amended by
deleting "subdivision (a)(2)(B)" and substituting "subdivision (a)(2)(B) or (a)(1)(B)(ii)".
SECTION 3. Tennessee Code Annotated, Section 49-7-202(f), is amended by adding
the following as a new subdivision:
(4) As used in this section, and for purposes of the state higher education policy
and the outcomes-based funding formula, "on-time graduation" means that a student
completed the student's first associate degree or first bachelor's degree in a standard
program of study within or in:
(A) Four (4) academic years for students enrolled in a public university
governed by the board of trustees of the University of Tennessee or a state
university board; or
(B) Three (3) academic years for students enrolled in a community
college governed by the Tennessee board of regents.
(5) The commission shall establish a means of using inputs into the outcomes-
based funding formula model to establish target on-time graduation rates for each state
institution of higher education and publish the target rates at least once every five (5)
years.
SECTION 4. Tennessee Code Annotated, Section 49-7-202(n)(2)(B), is amended by
deleting the subdivision and substituting:
(B) Notwithstanding subdivision (n)(2)(A), the commission may approve
separate maximum allowable tuition and fee increases for one (1) or more public
institutions of higher education that differ from the tuition and fee policy approved
pursuant to subdivision (n)(2)(A) if the commission determines that:
(i) A separate tuition and fee policy for an institution is necessary based
on the circumstances or needs of the respective institution; and

- 3 - 010869

(ii) The institution has demonstrated positive growth in the institution's
on-time graduation rate calculated on a three-year rolling average.
SECTION 5. Tennessee Code Annotated, Title 49, Chapter 7, Part 1, is amended by
adding the following as a new section:
Notwithstanding §§ 49-7-202(n) and 49-9-209(d)(1)(F), a public institution of
higher education shall not charge students tuition and fees for an online undergraduate
course that, in total, exceeds the total tuition and fees charged to students for a
comparable undergraduate course offered in person at the institution by seventy-five
percent (75%) or more if the institution does not offer an in-person course option that
satisfies the same course credit as the online course.
SECTION 6. Tennessee Code Annotated, Title 49, Chapter 7, Part 1, is amended by
adding the following as a new section:
(a) The board of trustees for the University of Tennessee, the board of regents,
and each state university board shall adopt and implement a policy regarding the use of
revenues generated by the out-of-state undergraduate tuition and fees charged by the
institutions governed by the respective board.
(b) The policy must:
(1) Describe the board's utilization plan for revenues derived from the
out-of-state undergraduate tuition and fees charged by the institutions it governs
and how those revenues may be used to mitigate the tuition and fee costs for in-
state undergraduate students; and
(2) Be implemented no later than July 1, 2026.
SECTION 7. Sections 1 and 2 of this act take effect upon becoming a law, the public
welfare requiring it. All other sections of this act take effect July 1, 2026, the public welfare
requiring it, and apply to the 2026-2027 academic year and each academic year thereafter.