In Minnesota, nearly 40 percent of minority students drop out of community college by the end of the first year, and many more never make it to graduation.

Now, college officials are hoping to improve the success rate by offering $500 incentives to high-risk students who return to school for a second year.

The new incentive program, as proposed, would provide one-time scholarships and grants to about 20,000 students over the next two years, according to Vice Chancellor Ron Anderson of the Minnesota State system.

The program, which would cost $10 million, is included in Minnesota State’s proposed budget request to the Legislature.

Anderson said the idea came up as part of discussions about how to reduce racial disparities in student achievement. In 2014, for example, the graduation rate for students of color was 15 percentage points lower than for white students at Minnesota’s community and technical colleges.

When students are struggling to make ends meet, Anderson points out, they’re more likely to drop out.

“We think this has potential to make a pretty significant impact,” he said. “For many of our students most at risk, that $500 is the difference between dropping out and staying in.”

As part of the program, colleges will identify students at high risk for dropping out, based on grades, attendance or other measures. Those students who agree to stay and register for classes the next fall will be eligible for a $500 grant. Another $500 scholarship will be offered to eligible students who complete a two-year degree and transfer to one of the system’s seven state universities.

Many students, Anderson notes, “are one car breakdown from staying in school.” So the extra money, he hopes, may be enough to help them “cross the finish line.”

These kinds of grants have been surfacing at numerous colleges across the country, he said, including St. Cloud Technical and Community College, which is part of the Minnesota State system.

Two years ago, the St. Cloud college got a $160,000 grant from the Morgan Family Foundation for its “Success Skills Program,” which has awarded $500 grants to 168 students so far, according to Kerby Plante, director of the Center for Academic Success. To qualify, students took part in academic coaching, earned a minimum 3.0 GPA, and continued registering for classes.

It’s too early to say whether the grants made the difference, he said, but all but one of those students remained in school. While $500 may not sound like much, he said, it could pay for books for a semester, or transportation costs. “That’s huge for a lot of them,” he said. “It’s not going to make their lives plush or super easy, but it does help to fill in some of the gaps.”

To Anderson, the incentives are about more than money. “It’s not only the financial benefit that the scholarships bring, but the psychological impact that comes with it that says someone believes in me enough to invest in my education.”