Minnesota lawmakers say they've found $5 million to plug a funding gap that threatened to upend the college careers of former foster children who use state grants to pay for tuition and living expenses.

"This is an extremely important issue for us," said Sen. Omar Fateh, DFL-Minneapolis, who chairs the Senate Higher Education Committee. "What we know is that these grants help a population that is less likely to go to college and more likely to drop out."

Hundreds of Minnesotans rely on the Fostering Independence Grant Program to help cover tuition and housing costs. Leaders with the state's Office of Higher Education warned lawmakers earlier this year that inflation and increased demand were squeezing the program's budget, so they'd need to find another $5 million or place about 40% of applicants on a waitlist next year.

Staff at nonprofit Foster Advocates had been talking Wednesday about how they could support grant recipients throughout the uncertainty, which left some of the students wondering if they'd be able to continue their studies next year or support their families. Then, they got an unexpected call alerting them of the deal.

When Ziigwan Frazer, the group's policy and advocacy manager, began calling the students, she could "hear the weight lifted." When they asked what would happen in future years, she told them: "Let's pause, and just say, let's take this win."

To plug the funding hole, Fateh and Rep. Gene Pelowski, DFL-Winona, chair of the House Higher Education Finance and Policy Committee, are proposing the state transfer a portion of the $117 million it had set aside for the new North Star Promise Scholarship Program, which offers free tuition at public colleges to students whose families make less than $80,000 per year.

Pelowski said he met Wednesday with Fateh and "we agreed it would be the best way to do it," noting that there was "a huge need" for the Fostering Independence Grants and that the transfer wouldn't change the overall amount of state spending.

Lawmakers said they expect legislation to be introduced soon and described this as a temporary solution to help students get through the next school year.

"I think this is exactly what we needed to do this year: figure out the shortfall for this year, and we can come back next year to have a deeper dive into it and make sure that this program will be funded fully going forward," said Sen. Jason Rarick, R-Pine City, who introduced the legislation that created the program.

Keith Hovis, a spokesperson for the state's Office of Higher Education, said leaders there support the transfer. He said they're confident they'll still be able to meet demand for North Star Promise, in part because estimates on how many students might use the program in the first year have been lowered from about 15,000 to 11,000. And, the federal government is increasing the amount of money it provides for some low-income students this year. Many students who qualify for the foster grants also receive that aid.

"We're glad that there is a solution that is going to come forward and that will ensure that everyone who is eligible will be able to benefit," Hovis said.

Demand for grants increased

When lawmakers created the Fostering Independence Grant Program three years ago, they held it up as a rare pandemic-era win that could help some of the state's most vulnerable residents improve their lives while reducing the long-term demand for social services.

Between 12,000 and 16,500 Minnesota children experience some form of out-of-home or foster care each year. Some children are removed from their homes after officials find evidence of abuse or neglect. Others wind up there as part of agreements designed to help them access specialized treatment for disabilities or mental health concerns.

Only about half of the nation's foster children graduate from high school ,and an even smaller portion — less than 10% — obtain college degrees, according to data from the National Foster Youth Institute.

To qualify for Fostering Independence Grants, students must be younger than 27, have spent time in foster care as a teenager and maintain adequate grades.

Leaders with the Office of Higher Education told lawmakers they tried to accurately predict interest in the program, which has a budget of about $4 million each year. They initially predicted about 550 people would qualify for the grants based on information students had reported on the Free Application for Federal Student Aid, the document used to determine what assistance students should receive.

Those estimates initially held up, with 492 people receiving the grants in the first year. Then demand for the program nearly doubled. If current trends continue, the office predicts 896 former foster children will request assistance through the program for next school year.

Elena Leomi, director of network and culture for Foster Advocates, said some students held off in applying the first year because they wanted to see how the program panned out and whether the state kept its promises.

With a deal now unveiled, she's hopeful "this will not impact that momentum of fosters reaching education equity with their peers."