In the final days of the legislative session, a major point of contention between the Minnesota House and Senate is the way in which state grants are allocated to college and university students. The House favors restructuring the state grant program to better target students needing assistance while the Senate favors an incremental approach that consists of funneling more money into the current system. The higher education conference committee can do students a big favor by adopting the Pell Pass Through, a provision that received strong bipartisan support in the House, but was not part of the Senate’s omnibus proposal.
Federal lawmakers have responded to the skyrocketing costs of attending college by increasing the maximum Pell Grant award from $2,700 to $3,000 in fiscal year 1999 and to $3,125 for the year 2000. An additional $400 increase has been proposed for 2001. Unfortunately, the structure of the Minnesota state grant program does not allow many low- and middle-income Minnesota students to benefit from these increases. Because there is currently a ceiling for a student’s combined Pell and state grant award, the total grant package for many students has remained the same. The only difference is that a greater portion is coming from the federal government.
The Pell Pass Through amendment would allow students to benefit from the increases in the federal Pell Grant awards by simply not including a student’s Pell Grant award when determining financial need. This change is necessary because as changes at the federal level have made more students eligible for Pell Grants and increased the maximum award, the number of low-income students receiving state grants has decreased while the number of students from families making over $50,000 per year has increased dramatically.
Defenders of the Senate’s incremental proposal say reducing the student share in the state grant formula (the percentage of costs a student is expected to pay) from 47 percent to 45 percent will help all students, no matter what type of school they attend. Although this is true, the state grant program disproportionately helps upper-income students who attend high-cost institutions. Currently, students who attend private colleges make up 17 percent of all state grant recipients, but they receive 53 percent of the state grant money — a gap that will increase as the student share is decreased.
The marginal benefits students receive from reductions in the student share do not come close to balancing out the costs. Reducing the student share by one percentage point costs about $9 million. During the last biennium, the student share dropped from 50 percent to 47 percent. This year the Senate’s bill calls for another 2 percent decrease. The Senate appears headed downward incrementally, using the small dollar amount each session as their rationale. However, a decrease from 50 percent to 40 percent would cost about $90 million — which is more than the Senate’s proposed funding increase for the University.
Minnesota’s state grant program must be reformed. Adopting the House’s Pell Pass Through provision is a big step in the right direction because it targets students who need financial aid to access higher education and complements federal initiatives.