The law guarantees Texas students who graduated in the top ten percent of their high school class automatic admission to all state-funded universities. The bill was created as a means to avoid the stipulations from the Hopwood v. Texas appeals court case banning the use of affirmative action. The Supreme Court ruled in Grutter v. Bollinger (2003) that affirmative action in college admissions was permissible, effectively overruling Hopwood. UT Austin then reinstated affirmative action for the seats not filled by the Top Ten Percent law.
The law only guarantees admission into university. Students must still find the means to pay, and may not achieve their desired choice of major. (Another existing law, which preceded 588, provides a full tuition scholarship for the class valedictorian of a Texas high school for their freshman year at a state public school.)
The Texas "Top 10% Plan" is a transition from a race based policy known as affirmative action. Under a policy such as Texas' Top 10% plan, it is believed that student enrollment for minority students specifically would follow a mismatch hypothesis. This hypothesis predicts that the rates of minority students graduation and retention would improve under the newly established plan in opposition to affirmative action. This mismatch theory would be a result of students finding a university that is a better match for them academically, rather than overreaching and becoming overshadowed. 
The law has drawn praise and criticism alike. Supporters of the rule argue that it ensures geographic and ethnic diversity in public universities. They also point out that students admitted under the legislation performed better in college than their counterparts.  The law has been blamed for keeping students not in the top ten percent but with other credentials, such as high SAT scores or leadership and extracurricular experience, out of the larger "flagship" state universities, such as the University of Texas at Austin and Texas A&M University, College Station. UT-Austin has argued for several years that the law has come to account for too many of its entering students, with 81 percent of the 2008 freshmen having enrolled under it. 
Some administrators, such as former University of Texas at Austin President Larry Faulkner, have advocated capping the number of top ten percent students for any year at one half of the incoming class. Others have suggested a move to a top seven percent law. However, until May 2009 the Texas Legislature had not revised the law in any way since its inception. A 2007 measure (HB78) was introduced during the 80th Regular Session (2007) but never made it out of committee.
Under legislation approved in May 2009 by the Texas House as part of the 81st Regular Session (Senate Bill 175), UT-Austin (but no other state universities) was allowed to trim the number of students it accepts under the 10% rule; UT-Austin could limit those students to 75 percent of entering in-state freshmen from Texas. The University would admit the top 1 percent, the top 2 percent and so forth until the cap is reached, beginning with the 2011 entering class. UT System Chancellor Francisco Cigarroa and UT-Austin President William Powers Jr. had sought a cap of about 50 percent, but lawmakers (led by Representatives Dan Branch (R-Dallas) and Rep. Mike Villarreal (D-San Antonio)) brokered the compromise.
- Kalena, Cortes (May 2010). "Kalena E. Cortes, Syracuse University Do Bans on Affirmative Action Hurt Minority Students? Evidence from the Texas Top 10% Plan". Article in Economics of Education Review: 1110–1124. doi: 10.17848/wp10-168.
- "'Top 10 percent rule' on session agenda". Archived from the original on 2012-09-10.
- "House moves to scale back top 10 percent rule", Ralph K.M. Haurwitz, Austin American-Statesman, May 26, 2009
- Cullen, Julie Berry; Long, Mark C.; Reback, Randall (2011). "Jockeying for Position: Strategic High School Choice Under Texas' Top Ten Percent Plan". NBER Working Paper 16663.
- Lavergne, Gary M.; Cindy Hargett (November 18, 2003). "Perceptions and Opinions of University of Texas Entering Freshmen: The Impact of The Texas Top 10% Automatic Admissions Law". Admissions Research. The University of Texas at Austin. Archived from the original on May 14, 2011. Retrieved 2006-05-15.
- "Texas Legislature Online - History". Texas State Legislature. February 26, 2007. Retrieved 2007-11-25.
- "HB 78 (80R)". Billhop Legislative Wiki. Archived from the original on 2011-07-08. Retrieved 2006-11-17.