Minnesota students would see tuition increase as much as 45 percent if a proposal drafted by the Minnesota Business Partnership, Chamber of Commerce and Private Colleges Council is adopted.

Testifying before the House Higher Education Finance Committee on Monday, the groups advocated devoting higher education finances to financial aid instead of institutions.

The Business Partnership Association and Chamber of Commerce proposed cutting funding for the University and Minnesota State Colleges and Universities by $160 million, which would – if costs were deferred entirely to students – raise tuition an estimated 45 percent.

In this plan, $120 million of the money would be transferred to the Higher Education Services Office in the form of financial aid, saving the state $40 million.

“The state should subsidize individuals as opposed to institutions,” said Bill Blazar, Minnesota Chamber of Commerce senior vice president.

Blazar said more financial aid will allow poor students access to education and will also increase education quality.

“It will put additional incentives on institutions to provide students to customers,” Blazar said.

Duane Benson, Minnesota Business Partnership Association executive director, also supported a system based heavily on financial aid.

“When we do fund institutions, we in effect fund wealthy people,” Benson said, adding that more than half of University students come from families with incomes greater than $90,000 per year.

“I think that for us to subsidize those people is inappropriate, particularly if there are people who can’t afford an education,” Benson said.

Currently, 90 percent of state higher education money goes to institutions, while 10 percent funds financial aid.

Benson and Blazar want this percentage to change to an 85-15 ratio.

Less than one week after hearing University and MnSCU students’ testimony on the impact of tuition increases, several legislators were skeptical of Benson and Blazar’s proposal.

Rep. Lyndon Carlson, DFL-Robbinsdale, questioned the accuracy of the 90-10 figure, since research, public service and graduate programs at the University and MnSCU schools do not benefit from financial aid.

“If you were to factor out those items, the ratio is more like 75 percent as opposed to 90 percent,” Carlson said.

Rep. John Dorn, DFL-Mankato, said even with heavier financial aid, the tuition increases could bring “sticker shock” to students looking at schools.

“The magnitude of what you’re proposing might be counterproductive,” Dorn said.

Representatives also expressed concern that 50 percent of financial aid awards go to private schools, even though more than 67 percent of students receiving higher education in the state attend the University or MnSCU schools.

On Wednesday, the Minnesota State University Student Association Chairman Yorgun Marcel advocated eliminating the Higher Education Services Office, both as a cost-saving device and because the office eliminated work-study and child-care programs after it failed to predict state grant demand.

Benson and Blazer said under their plan work-study and child-care grants would be fully funded.

Returning investment

David Laird, president of the Minnesota Private College Council, also argued for more financial aid funding, saying it will ensure Minnesota has the educated work force it needs in the future.

“Given our critical need of educated labor Ö we believe the state grant program is the keystone in providing an education to low- and median-income students,” Laird said.

Laird said his organization is pushing to give 30 percent of higher education spending directly to needy students by 2006.

He said the division of state grant money was fair, considering one-third of the bachelor’s degrees awarded in the state come from private schools.

“Considering we award one-third of the baccalaureate degrees, the 2.6 percent (of state higher education funding) grant program is one of the best returns on investment in the state,” Laird said.