Financial aid likely to be cut

College students will likely have to get by with less financial aid from the state when they begin their fall semester.

The state grant program — the need-based financial aid awards available to Minnesota college students — faces a $41.6 million deficit for the current biennium. To fix it, beginning next fall, students who receive state grant money will see a $300 average reduction in their total award, said Meredith Fergus, policy analyst for the Office of Higher Education.

According to Fergus, actual grant reductions will probably range from $150 to $1,000 per year, depending on the students’ individual financial circumstances. She said the reductions are needed to fix the program’s deficit, which has been caused largely by enrollment increases driven by increased unemployment in the state.

“We’re seeing higher enrollment across the board,” she said, adding, “It certainly caught us off guard.”

Fergus and other OHE officials discussed the situation with members of the House Higher Education and Workforce Development Finance and Policy Division Feb. 18. No action was taken.

Mark Misukanis, director of fiscal policy and research for OHE, said the office could’ve reduced the deficit by making reductions earlier in the biennium, but decided it would be fairer to students to fulfill the grant amount they had already been promised.

“The downside is that now we have to take a two-year problem and fix it in one year,” Misukanis said.

Compounding the situation, another financial aid program, the Achieve Scholarship, had to borrow money from the state grant program to pay for an unexpected increase in demand for scholarship funds. Additionally, Gov. Tim Pawlenty’s supplemental budget proposal includes a $2.3 million cut to the state grant program.

Roughly one in three college undergraduates in Minnesota receive financial aid through the program.