About 100,000 low- and middle-income Minnesota college students will see a one-time, $295-per-student boost in the living-expenses allowance the State Grant Program awards next year, the Minnesota Office of Higher Education announced last week. So why the worried looks among some of that program’s strongest advocates as the Legislature adjourned for the year?
It’s because of what higher-education Chancellor Larry Pogemiller called a “missed opportunity.” The increase that grant-eligible students will see on their 2014-15 financial aid statements was the result not of the Legislature’s action, but its inaction.
Legislators turned down Gov. Mark Dayton’s recommendation that Minnesota use a growing surplus in the State Grant Program to pay for a permanent change in its distribution formula. The change Dayton urged would have allowed the program to more nearly meet one of its long-standing aims — allowing low-income students the same attendance options among public and private Minnesota colleges that more affluent student have.
Dayton’s recommendation would have directed more assistance to students who choose higher-cost private colleges and the University of Minnesota. It would have aligned the formula to today’s tuition at the state’s flagship university, which would also have accounted for a bigger share of the tuition charged at higher-priced private schools. Dayton’s approach also would have adjusted the formula’s allowance for living expenses, pegging them to the federal government’s poverty line for a single person.
The net effect of Dayton’s plan would have been to give every grant-eligible student a $200 boost for living expenses and qualifying students at higher-cost institutions an average additional increase of $310 in 2014-15.
The governor’s proposal ran into resistance in the House, where DFL Rep. Gene Pelowski of Winona heads the higher-education funding committee. Pelowski explained this week that he didn’t favor a permanent change in the grant distribution formula in the middle of a two-year budget period. He doesn’t believe policymakers have a thorough understanding of the factors contributing to a $20 million surplus that materialized only a few years after the program was short of funding. He noted that the 2013 Legislature provided a hefty $70 million boost in biennial State Grant funding. Critics cannot claim that the program has been shortchanged.
The fiscal caution Pelowski evinces has merit. But he also noted that in 2013, legislators imposed a two-year tuition freeze on the Minnesota State Colleges and Universities system and exacted a promise of the same from the university’s Board of Regents, which controls that system’s tuition.
Hence, the only Minnesota colleges that are raising tuition next year are private ones. The only grant-eligible students disadvantaged by the House’s rejection of Dayton’s proposal are those who choose — or would have chosen — a private college. That’s why private-college officials were glum at the session’s end.
The sums involved this year were small enough to be unlikely to alter many, if any, enrollment decisions for next fall. Under current law, the Office of Higher Education can use the State Grant surplus for a one-time increase in living and expense allowances, which flow to all grantees, no matter where they enroll. That’s the $295 boost that’s coming next year.
But the Legislature’s failure to adjust State Grants to tuition increases — be they public or private — ought not become a trend. Neither should the Legislature continue its 2013 strategy of providing substantial increases in state funding to MnSCU and the University of Minnesota in exchange for tuition freezes — politically popular though they may be.
As economist Jenny Bourne of Carleton College concluded in a Minnesota-specific analysis 12 years ago, using tax dollars to hold down tuition results in substantial hidden subsidies to students from middle- and upper-income families who opt for public colleges, while diverting funds that otherwise might have been used for financial aid to needy students.
When financial aid formulas don’t keep up with the true cost of attendance, low-income students’ educational choices are restricted. And when that happens, Minnesota’s ability to make the most of its human capital is thwarted. In 2015, the Legislature should look again at the State Grant Program, and make sure it’s still a key that opens college doors of all types, for all students.