‘Let down by legislators’: Thousands of Minnesota college students face reduced financial aid due to legislative inaction

MINNEAPOLIS – Every year for over four decades, tens of thousands of Minnesota students have relied on a popular grant program to reduce their college bill. One of those students is Aaron Eischen, 19, who is juggling classes this summer with a job at Sam’s Club.

Though it’s just one of several pots of state money students can access to pay for college, the State Grant Program is the largest, accounting for $222 million in aid to over 75,000 students in fiscal year 2025. 

Eischen got about $2,900 this past school year to go toward his graphic design studies at Dakota County Technical College, mixing it with other forms of aid to help soften the blow of the education he hopes will lead to long-term financial stability.

“Stripping away that (aid) would be devastating to a lot of students,” he said.

And yet Minnesota is again stripping away how much aid students receive from the grant program, this time because of a projected $131 million budget hole that lawmakers neglected to fill. It’s the fourth straight fiscal year the program has experienced a multimillion-dollar shortfall — a sign of growing demand but also structural issues that Republicans and Democrats can’t agree on how to fix.

Related: Minnesota’s modern learners can’t wait for higher ed to catch up

State officials estimate that this fall, 80% of grant recipients’ aid could be cut as a result of the shortfall. Data obtained by MinnPost shows about a third of students are projected to lose $1,000 or more from an award that, last fiscal year, averaged $2,927. 

And anywhere from 17,000 to 20,000 students could see their grants eliminated entirely, according to state projections.  

Especially concerning for those working to make higher education accessible is what happens if legislators go another budget cycle without finding a long-term solution. 

“Both political parties have competing interests right now, and that is preventing conversation to address what is happening at the state funding level,” said BG Tucker, executive director of College Possible Minnesota, a nonprofit that helps low-income students go to college. 

“We needed everyone to come to the table and come together on it,” she said, “and that didn’t happen.” 

When lawmakers created the State Grant Program in 1969 and started funding it in the 1980s, they said that helping low-income students pay for college was in “the best interests of the state.” 

A 2015 state law established the goal that at least 70% of residents age 25 to 44 obtain a degree or credential across the following decade. The state missed that benchmark, largely because of persistent equity gaps along racial and ethnic lines.

Financial aid programs help. 

Related: Counterpoint: The real reason many students choose online education is access

Today, the grant program is the largest of 12 need-based financial aid programs administered by the Minnesota Office of Higher Education. 

Over half of grant recipients in the 2025 fiscal year came from families earning less than $40,000 annually, and nearly half of recipients identified as students of color. Just over 2 in 5 attended publicly funded community colleges and technical schools, which are known for their low-cost tuition and workforce programs. 

Meghan Flores, who oversees financial aid programs for the Office of Higher Education, said she doesn’t want to send a message of panic about the persistent shortfalls, noting other programs can help fill the gaps. 

At the same time, she said, “It’s very difficult when we know there are capable, smart, talented students in our communities that want to go to our colleges, and that have legitimate need for help to pay, and we don’t have enough dollars to give.”

‘Hobbling along’

After a decade of declining applications, the State Grant Program is growing — fast. Officials have seen an influx of almost 27,000 more applications since 2023. 

That rising demand stems from increasing college enrollment — as well as recent changes that expanded who qualifies for Federal Pell Grant awards, and for how much. Because Minnesota ties its financial aid eligibility to the federal Pell Grant formula, more students qualified for state grant awards, and many of those awards grew.

“That makes it highly likely that we could continue to see these projected deficits in future years,” Nicole Whelan, a research analyst with the state education agency, told lawmakers during a committee meeting this spring.

Because state grant awards are also based on tuition rates, the program is absorbing costs from a two-decade climb in the cost to attend Minnesota’s public colleges and universities.

In the 2023-24 academic year, the Office of Higher Education filled a $9 million hole by shifting money internally. Another shortfall the following year prompted the state to eliminate aid for 8,455 students. 

Lawmakers then managed to close a $239 million hole during the spring 2025 session, adding $44.4 million and covering the rest with program cuts that affected students — like reducing how many college credits the program will pay for.

But costs again outpaced resources, leading to the latest $131 million shortfall.  

“I would describe the State Grant Program as sort of hobbling along,” Sen. Zach Duckworth, R-Lakeville and ranking minority member of the Senate Higher Education Committee, said in an interview. “Until or unless we do something pretty drastically different, it’s going to continue to have the financing and funding issues that it’s had.”

Gov. Tim Walz, along with Democratic and Republican lawmakers, all offered various solutions this legislative session to address the problem. Not one was approved.  

One proposal backed by the governor would have changed how Minnesota calculates student financial need, shifting away from the new federal formula. Doing so would have saved some $38 million, but reduced state grant money awarded to students most in need of help. 

During a committee hearing, Rep. Jessica Hanson, DFL-Burnsville, equated that to “pulling out the rug from underneath poor students who need it the most, for who college is arguably one of the only ladders out of poverty.”

Walz also suggested lowering the cap on tuition and fees paid out for grant recipients attending four-year schools – a potential $40 million in savings. That drew pushback from advocates for private nonprofit schools, which cost more to attend.

Republicans largely suggested cuts to offset the shortfall — one, to prohibit undocumented students from obtaining state grants, which would have saved $5 million, and another to restrict eligibility in another financial aid program, North Star Promise, and direct that $21 million in savings toward state grants.  

Related: Minnesota lawmakers spotlight impact of canceled federal higher education grants

When Democrats created North Star in 2023 during their majority control of the Legislature, they argued it was critical to reducing equity barriers that plague higher education — and some credit the program with helping to drive up enrollment.

North Star, which covers any tuition and fees that remain after other aid sources are applied, cost $108.2 million during its debut 2024-25 school year and supported 53,567 students with average checks of about $1,700. 

But Republicans stress Minnesota already had a bucket of funding for financial aid via the grant program, then created a second option accessible to a narrower pool of students without enough money to spare.

“We’ve diverted it elsewhere,” Duckworth said, “at the expense of drying up that bucket that most people have relied upon over the decades to help plan for and afford college.”

Rep. Nathan Coulter, DFL-Bloomington and co-vice chair of the House Higher Education Finance and Policy Committee, said he doesn’t buy the argument that North Star is draining money from the grant program. 

Rather, he thinks the Legislature should reconsider how much grant money flows to private institutions. He proposed stripping eligibility for private for-profit schools, whose students received $6.5 million in grant money in fiscal 2025. That idea also was rejected.

Ultimately, he said, students who use the grant program “were let down by legislators.”

“As we think about the future of the State Grant Program … we’re going to have to fundamentally rethink how it’s structured,” Coulter said. 

“If we want more people to go to college, and we want it to be more affordable, I don’t know how you get out of that without spending some new money on students.”

Sen. Omar Fateh, DFL-Minneapolis and chair of the Senate Higher Education Committee, said the solution is to add more money to the program, because “we made a commitment to our students.” 

“There are many first-year students who started college because of those commitments,” he said. “We can’t just pull the rug out from them now.” 

‘A failure of systems’

As a first-generation student, Eischen said cost was key when selecting where to go to college, so he chose an option near where he grew up in the East Metro of the Twin Cities — a school where aid would cover most costs and help him avoid debt. Last year, he paired state grant money with a Federal Pell Grant, a state work study program and a small federal loan.

During the school year, he spends six days a week either in classes or working at Sam’s Club, passing out samples of products like Gatorade or bites of chicken.

Eischen sees college as the first step toward landing a stable job, buying a home and, ultimately, achieving financial stability. He plans to go into photography, graphic design or both.

In late July, Eischen got good news: Overall, his state grant aid for fall and next spring decreased by only $215. While he’s relieved, he said that even after he graduates next summer, he will think about the financial strain others go through to pay for a degree. 

“Even when I’m done with college, there’s still going to be people who are in college who are trying to afford it,” said Eischen, who also serves as vice president of the student organization LeadMN and spends time meeting with lawmakers to advocate for better access to higher education.

A 2024 state report found nearly 40% of undergraduate students in Minnesota struggle accessing or being able to afford food, housing, transportation or healthcare — putting at risk their ability to succeed in college and, eventually, earn a living wage. 

Scott Olson is chancellor of the Minnesota State system, which includes 26 two-year colleges and seven universities and is the third-largest system of state colleges and universities in the U.S. Within the system, some 22% of students — about 46,000 people last fiscal year — received state grant aid.

In an interview, Olson said the state grant shortfall will have a “big effect” on the overall   college affordability. The best thing the Legislature can do, he said, is fully fund higher education so schools can maintain tuition rates. 

“But that hasn’t happened lately, and so you see people raising tuition, and then that puts the pressure on financial aid,” he said.

Related: Food insecurity is a serious ‘silent problem’ on Minnesota college campuses

All states are feeling the pressure to invest in financial aid programs to help students cover the costs. 

In the 2023-24 academic year, according to the National Association of State Student Grant and Aid Programs, states awarded $18.6 billion in student financial aid. Almost $12 billion went toward undergraduate need-based grants.

Minnesota has increased its payout of need-based grants by 44% in the past decade. Meantime, the state education agency is studying ways to redesign its financial aid system to ensure state dollars support as many students as possible, though any changes would need legislative approval.

Tucker, with College Possible, said Minnesota students live in a state that is “very mindful of opening the door” to a college education.

“So, how can you say we’re going to open the door, but you might not be able to afford it?” she said. “That feels like a disingenuous offer. And we’re going to have to figure that out as a state.” 

Tucker said many students have been left wondering what will happen to their aid this year.  Her organization will use its regular pool of emergency aid to help, Tucker said, knowing losing even $500 could force some students to take out a loan, and some may stop taking classes.

“You would hate to see a failure of systems be the reason that a kid is not finishing their second to last semester in college,” she said, “and getting that degree.”

Cleo Krejci is an investigative reporter covering community colleges as part of a collaboration between MinnPost and Open Campus. If you’re a college student facing a reduction or outright elimination of your state grant, we want to hear from you. Reach out at ckrejci@minnpost.com. 

The post ‘Let down by legislators’: Thousands of Minnesota college students face reduced financial aid due to legislative inaction appeared first on MinnPost.