Meeting our state’s future workforce needs and driving upward social mobility for young people growing up in less privileged circumstances are two of Minnesota’s most pressing challenges. Investing in need-based financial aid for postsecondary students through the Minnesota State Grant program is one of the most effective tools available to address these critical state priorities because it invests limited state resources directly in students who struggle the most to access and complete a postsecondary education. The evidence overwhelmingly shows that a postsecondary degree or credential leads to increased income, greater employment stability, better health outcomes, longer life expectancy and increases in other measures of economic and social well-being.
Minnesota has always been a leader in providing need-based financial aid to students and the Minnesota State Grant program is recognized as a national model for financial aid programs. The Minnesota State Grant is founded on the premise that the best educational outcomes for students and the state are achieved by providing financial support directly to students based on their need and letting each student choose the educational option that best meets their goals and aspirations. In fact, this public policy concept is codified in state statute (Minn. Stat. 136A.095). Just like the federal Pell Grant, the State Grant follows the student to the environment that is most conducive to their success. More than 71,000 Minnesota students, attending both public and private institutions, benefitted from State Grants last academic year.
Recognizing that Minnesota is significantly under-investing in need-based financial aid, the Legislature created the North Star Promise in 2023. This program provides additional financial aid to make college tuition-free for a subset of State Grant recipients — about 17,000 students — who choose to attend a public institution. North Star Promise recipients mainly have incomes between $50,000 and $80,000 because combined Pell and State Grants cover the cost of tuition for many students with family incomes below $50,000 at Minnesota State Colleges and Universities. By its design, North Star Promise excludes a majority of the 71,000 students who have demonstrated financial need by qualifying for the Minnesota State Grant, including many public institution students and all low-income students at private nonprofit colleges.
Public colleges alone cannot solve our social and economic challenges, nor should they be expected to do so. Private nonprofit colleges serve these same public purposes. To meet its workforce development and social mobility goals, the state needs to increase financial investments in all students with demonstrated need and take full advantage of all of Minnesota’s educational assets — including its stellar private colleges.
Thirty-six percent of Minnesota’s high school graduates who stay in Minnesota to seek a four-year degree choose to enroll in a private nonprofit college. Private colleges serve a diverse student body — 26% of undergraduates are low-income and 31% are students of color or Native American students, percentages that equal or exceed Minnesota public four-year institutions. And the collective four-year graduation rate at our 18 private nonprofit colleges for low-income students is second in the nation when compared on a state-by-state basis with other states’ private colleges.
A recent opinion piece published in MinnPost — “Let’s not extend the North Star Promise to private schools” — wrongly suggested that private colleges seek to be included in the North Star Promise program and left the misleading impression that State Grant funding disproportionately benefits private college students. In fact, the State Grant program treats all students fairly:
- By law, the State Grant limits the amount of financial aid for private institution students to not more than the amount the student would receive if they attended the University of Minnesota’s Twin Cities campus.
- The average State Grant at private nonprofit colleges is $5,342, which is lower than the average grant of $5,736 at the University of Minnesota.
- Students at the University of Minnesota constitute 17% of the State Grant recipients and receive 32% of the State Grant funding, percentages that are very similar to the percentages for students at private colleges (20% and 33%).
Students in the Minnesota State system receive smaller grants because their tuition is substantially lower. Tuition is lower in large part because the state provides the Minnesota State system with an institutional appropriation exceeding $900 million annually. The institutional appropriation covers about 56% of the cost of tuition, amounting to a 56% tuition subsidy for every student in that system, including all State Grant and North Star Promise recipients. Less State Grant aid is required to make attendance possible for these students because additional public funds are already subsidizing the cost of tuition.
It is equally important to understand the big picture of higher education funding: less than 4% of the state’s $2.1 billion in annual higher education spending goes to State Grants awarded to students who choose to attend a private nonprofit college, whereas more than 90% of the state’s higher education spending goes to public institutions and their students in the form of institutional appropriations and State Grants. This minimal State investment in students at private nonprofit institutions delivers a great return to the State and students: 31% of all four-year degrees granted annually in Minnesota, high four-year graduation rates, and well-educated graduates ready to serve, lead, and succeed in our communities.
Rather than advocate for a policy approach that excludes many students in order to help some students — a zero-sum approach that won’t solve our social mobility and workforce challenges — all higher education advocates should join together to seek expanded investments in need-based financial aid for all students with demonstrated need, regardless of where they choose to study.
A good first step would be to engage together in a unified effort to ensure the State Grant program is fully funded. Currently, it is facing a $211 million deficit, which, if not addressed, will have devastating effects on the lower-income students who count on these grants at both public and private institutions. Research shows that increases in need-based financial aid increase postsecondary enrollment and completion. Reductions in need-based financial aid can be expected to have the opposite effect.
In the future, when the State Grant is fully funded and additional resources are available, some of those resources should be invested to provide financial aid fairness to all the State Grant recipients at public, tribal, and private nonprofit colleges who are not eligible for the North Star Promise. This can be accomplished by making an investment in a new, separate program that provides a scholarship to all State Grant recipients excluded from the North Star program through a percentage match to the State Grant that overall approximates the per student investment in North Star Promise. This approach would deliver financial aid fairness for all students with need and is the best path to improving social mobility and making Minnesota economically strong in the decades ahead.
Barbara McDonald, the president of The College of St. Scholastica, is the chair of the Minnesota Private College Council board. She wrote this with the other 16 presidents of the Minnesota Private College Council member institutions.
