Michigan lawmakers prepare to tighten college financial aid budget

Michigan lawmakers prepare to tighten college financial aid budget

Tuesday, June 16, 2009

Michigan lawmakers prepare to tighten college financial aid budget

Marisa Schultz / The Detroit News

Thousands of college students counting on state merit scholarships this fall may be in for a surprise, as lawmakers are poised to gut the state's financial aid budget.

A Senate Appropriations subcommittee will likely take the first step in that direction today when it takes up a bill to eliminate the Michigan Promise Scholarship and slash the budget for need-based grant programs.

If the House, the full Senate and the governor sign off on the plan, its impact would be immediate, forcing colleges to redo financial aid packages and families to scrape up the cash or loans.

"It's not going to be popular and it's not going to be pretty," Matt Marsden, spokesman for Sen. Majority Leader Mike Bishop, R-Rochester, said of the magnitude of financial aid cuts that need to be made.

More than 96,000 students who have graduated since 2007 are expecting Michigan Promise scholarships ranging from $1,000 to $4,000 this fall. Students earn the grants by passing a standardized test or successfully completing two years of college.

Uncertainty over whether the money they were promised will be given is frustrating parents like Donald Neely of White Lake Township.

"People use that promise for their plan," said Neely, whose son will start at Alma College this fall. "Fortunately we are in a position where we are able to make that up. Other people are not. There are people who are going to be tremendously hurt by this."

The cuts are necessary because the state is facing a $1.7 billion deficit for the fiscal year that begins Oct. 1. As a result, House and Senate leaders called on their committees to hack their budgets -- $525.8 million in cuts in the House and up to $1.2 billion in the Senate.

Stimulus rules limit options

The higher education cuts will land disproportionately on financial aid because $1.42 billion of Gov. Jennifer Granholm's proposed $1.71 billion higher education budget goes for operations of the 15 public universities. Accepting federal stimulus dollars precludes the state from slashing funding to universities -- each university would see just a 0.4 percent cut under the Senate subcommittee plan -- so that leaves financial aid the only area left to cut.

In addition to the elimination of the popular $140 million Michigan Promise Scholarship program, the Senate higher education subcommittee bill would reduce need-based grant programs from about $139 million last year to about $85 million this year. That would wipe away the $7.3 million work study program, the $2.7 million part-time independent student grant program and $2.1 million Michigan Education Opportunity Grant program, according to documents obtained by The Detroit News.

Other need-based grant programs would be dramatically cut. The Tuition Grant program, which awards up to $2,100 to students at private colleges, would be trimmed from $56.7 million to $31.7 million. Funding for the Competitive Scholarship that awards up to $1,300 per student would by slashed from $35.5 million to $16.3 million under the proposal.

"This is a huge budget deficit we are facing, of an unprecedented amount," said Rep. Joan Bauer, D-Lansing, chairwoman of the House higher education subcommittee. "In higher education, this means massive cuts to financial aid at a time when we really should be investing more, not less, in helping kids get a college degree."

Need-based programs have been targeted for cuts all year, so the state didn't send out award letters to recipients in May, as it typically would.

However, the state sent congratulations letters to 41,666 high school juniors last year alerting them to their Michigan Promise scholarships.

"It's called the Promise grant," said Michael Boulus, executive director of Presidents Council, State Universities, which represents the 15 public universities. "The letter went out promising students they would receive the funds. And to pull the money out from them at this late in the game, it's going to create some real economic challenges for Michigan families."

MSU can't cover all losses

At Michigan State University, students received $50 million in state-sponsored scholarships last year, including $13.4 million in Promise scholarships and $5 million from the state Competitive Scholarships.

If the state pulls the plug on these programs, MSU doesn't have money to replace the loss for all students, said Val Meyers, associate director of financial aid at MSU.

The University of Michigan, which has committed to covering the gap between undergraduates' scholarships and other funding and the cost of tuition, would need to spend $3 million to replace the loss of Promise scholarships for students in financial need, said Pamela Fowler, executive financial aid director.

Said Marsden, the spokesman for Bishop: "Cutting higher education is never really popular with the public; neither is cuts to State Police, cuts to corrections and ... layoffs. This is a universal situation. ... But at the end of the day, we only have so much money to work with."

The state may face public outcry over pulling the Promise scholarship, but legally it's possible, some lawmakers say, because the statute allows the state to reduce scholarships to students if money isn't appropriated to fund the program.

After today's action, the bill could head to the full Appropriations Committee on Wednesday and then on to the full Senate shortly thereafter, sources say. The legislation would then head back to the House.

House Republicans haven't taken a position on what to cut: merit-based aid vs. need-based. But House Speaker Andy Dillon, D-Redford Township, believes preserving scholarships for the neediest students is paramount.

"When it comes to cuts to scholarships and higher education, we need to do everything in our power to protect those who need help the most," Dillon said in a statement.

But Granholm is a champion of the Promise Scholarship. Her spokeswoman wouldn't speculate on whether she'd veto a bill that eliminated the program.

No matter the outcome, financial aid leaders and families hope the decision comes quickly.

"It would be nice to know sooner rather than later so we can let students know," Fowler said.

mschultz@detnews.com (313) 222-2310

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