‘High-tuition, high aid’ system to receive less aid

In the past legislative session, Minnesota lawmakers began implementing a “high-tuition, high aid,” higher education model. Under this system, tuition at Minnesota colleges rises due to institutional budget cuts, but Minnesota families are given access to more state grant money to help defray these rising costs. To supplement state grants and scholarships, this system also encourages students to seek federal grant monies.

Late last month the U.S. Department of Education changed the formula for determining the amount of federal grant money for which a student can qualify. The change is expected to reduce federal financial aid for many students from current levels by $100 to $1,000 per year. For many of Minnesota’s students, this formula change will also reduce the amount of state grant money they can claim; allocation of some state grant monies is based on the federal aid formula.

Given Minnesota’s new higher education model, this formula change is bad for students and their families, right? Well, that depends.

For the poorest of students and their families, the change in the formula could be very problematic. Any increase in out-of-pocket expenses or loan levels is not trivial for people living check-to-check. State officials must ensure the poorest students are not affected by this change, even if that means shifting state grant money that was originally targeted for more middle- class students.

However, for middle- to upper-class students and their families, the slight reduction in grant money need not be problematic. According to U.S. Department of Commerce data, the vast majority of middle- to upper-class families continue to spend more and more on discretionary items relative to necessities. In fact, American preferences for larger vehicles and sophisticated electronics are driving this discretionary spending. Certainly, in lean times, American families can decrease their spending on discretionary items and choose to finance important items such as education.

In the last election cycle Minnesotans elected a cadre of politicians who campaigned on enforcing fiscal discipline within government. Therefore, should not Minnesota families with sufficient means be expected to spend prudently as well, and take on a greater responsibility for paying for life’s necessities, such as education?