Office of Higher Education warns of projected State Grant shortfall; colleges urge additional funding

Office of Higher Education staff briefed the committee on a projected shortfall in the State Grant program, saying current-year spending projections exceed the appropriation and that the agency transferred funds from the next fiscal year to cover the gap. The office said projected FY27 demand could produce a larger, biannual deficit if additional revenue or policy changes are not enacted.

"We project spending of around $333 million for fiscal year 27, for a bianual deficit around $131 million," Nicole Whalen, the agencys state grant research manager, told senators, describing enrollment increases and a higher-than-expected FAFSA filing rate as drivers. The office said it has used statutory levers (assigned student responsibility and family responsibility) to reduce awards proportionally when funds are insufficient.

Representatives of private colleges and student leaders described the human impact of award reductions and urged the Legislature to provide additional funding rather than rely on further rationing of grants. Paul Cerkvenik of the Minnesota Private College Council warned that continued cuts will make college unaffordable for students with limited means.

Senators and agency staff said the Governor's recommendations would be presented to committee leadership with policy options to reduce rationing or add funding; lawmakers signaled that Finance and budget discussions will follow.