State Legislation Update: Financial Aid & College Affordability

SHEEO
4 min readAug 23, 2023

By Andrew Smalley

In the 2023 legislative session, state lawmakers considered more than 380 bills related to financial aid for postsecondary education. With lingering postsecondary enrollment declines, ever-rising student loan debt, and declining faith in the value of a degree, states are working to support affordable postsecondary pathways for students.

Amid relatively strong fiscal conditions, many states are expanding existing financial aid programs or creating new scholarships to serve students in their states. Alabama enacted legislation to create the ReEngage Alabama Grant Program to provide grants of up to $3,000 to adults returning to college. The legislation also creates the Alabama Short-Term Credential Scholarship Program for short-term credential programs offered at community colleges. This short-term program utilizes ­a payment model where the state pays half of the grant upon enrollment and the second half upon program completion. If the student does not complete the credential within a year, the student must repay the grant. Arkansas created a needs-based scholarship program, the Arkansas Academic Challenge Plus Scholarship. Funded with lottery revenue, as well as a $20 million appropriation, the scholarship provides increasing increments of support for students as they advance in their academic pathways, capping at $5,000 for students in their senior year of a four-year degree program.

Other states focused on scholarship programs directly addressing workforce challenges. Utah created the First Responder Mental Health Services Grant Program to award grants of up to $6,000 per year to individuals studying to become mental health therapists. Minnesota included provisions and funding to create the Paramedic Scholarship Program to provide up to 600 scholarships for students entering paramedic programs.

States also worked to provide additional flexibility and access to existing financial aid programs. Legislation in New Jersey will allow students to use state financial aid programs to enroll in summer coursework. Tennessee passed a measure that will allow students who finish a baccalaureate degree in less than four years to use the state’s HOPE scholarship funds for a graduate degree program.

All 50 states have at least one local or statewide promise program, according to College Promise, and 2023 saw at least eight states consider the creation of a new program. Minnesota passed legislation creating the North Star Promise Scholarship program, a last-dollar financial aid program for state residents with a family income under $80,000, enabling eligible students to attend public state colleges and universities. The program will be funded with a $117 million appropriation, serving an estimated 15,000–20,000 students in its first year. This legislation also created grant programs to support student parents and individuals with disabilities pursuing a postsecondary credential. Massachusetts is considering the creation of a MassReconnect scholarship program for adult learners, modeled after similar programs in Tennessee and Michigan.

Several states have also enacted targeted promise programs to focus on providing support for students enrolled in high-need workforce areas. Colorado passed legislation creating a promise program for certain in-demand short-term credentials, such as early childhood education, law enforcement, firefighting, forestry, construction, and nursing. Rhode Island will create a pilot program for a last-dollar tuition and fees scholarship for students at Rhode Island College in high-need fields. Tennessee will create a pilot program to award Tennessee Future Teacher Scholarships equal to last-dollar tuition and fees to eligible students pursuing a teaching degree and who agree to teach in an eligible Tennessee public school for at least four years upon program completion. Texas passed a bill to establish a similar program for teachers who serve in shortage areas.

Louisiana modified its M.J. Foster Promise Program to serve students on a first-dollar basis, allowing students to receive the scholarship before other financial aid and grants. The scholarship can also now be used for books and instructional materials. Hawaii also passed legislation allowing community college students enrolled in certificate programs to participate in the state’s promise program without completing the Free Application for Federal Student Aid (FAFSA).

Indiana and Oklahoma passed legislation requiring high school seniors to complete the Free Application for Federal Student Aid (FAFSA), joining at least seven other states that require completion of the FAFSA for high school graduation.

State legislators are also working to limit costs and slow the increases in tuition at public colleges and universities. Minnesota and North Dakota passed legislation to freeze tuition and fees, and at least seven other states will see no tuition increases at public university systems based on legislatively-appropriated budgets. Connecticut passed legislation to implement recommendations of the State Open Educational Resource Coordinating Council, including model policies for higher education institutions, data collection, and online course catalog information. California included a $3 million appropriation in its state budget bill to support textbooks and digital course content for incarcerated students.

The wide range of financial aid legislation considered and enacted this year demonstrates how valuable aid programs are as policy tools for advancing state higher education goals. While aid programs are primarily viewed as improving higher education affordability, states are also using them as workforce development and recruitment tools to help offset enrollment declines. As with all policy innovations, states will need to evaluate the new programs in future years to help ensure the public investment is meeting the needs of the state and flowing to the targeted student populations.

ABOUT THE AUTHOR: Andrew Smalley is a policy specialist with the National Conference of State Legislatures.

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