Balancing the need to keep college affordable in the worsening Michigan economy, Gov. Jennifer Granholm’s new budget proposal calls for a funding increase of $59.5 million to the Michigan Promise Grant, a merit-based scholarship program that gives students up to $4,000 to help pay for college tuition.
The proposed budget also includes combining multiple existing need-based programs into one fund, called the Michigan College Access Grants. Overall, need-based programs would take an $18.8 million funding cut, or 5.8 percent, if this action were to be enacted.
While the proposal reduces funding to need-based programs, the budget proposal would make more students eligible for funding, according to Tiffany Brown, a spokesperson for Granholm’s office.
She said that with the new Michigan College Access Grant fund, students who were not previously able to get money from the earlier programs will now have the opportunity to qualify for state aid.
“We are trying to streamline to make need available to more students,” Brown said.
At the University of Michigan, in the 2007-2008 school year 3,152 students received a total of $3,155,000 from the Michigan Promise Grants program, according to Pam Fowler, executive director of the University’s Office of Financial Aid.
Granholm’s proposed budget would raise statewide funding for Michigan Promise from $80.5 million in the 2008-2009 school year to $140 million in the 2009-2010 year.
Susan Dynarski, an associate professor in the Ford School of Public Policy, has researched the effectiveness of merit-based scholarship programs. She said that in states with “generous and transparent” programs, the number of students who enter college increases by 5 to 7 percentage points.
Dynarski noted that merit-based programs like one in Georgia — where students who earn a B average in high school receive money from the state for full tuition and fees — have yielded better results than the Michigan Promise Grant program.
“When well designed, merit scholarships can be very effective,” Dynarski said. “If they are generous enough and transparent enough they can be a powerful signal to families.”
Transparency is key to an effective scholarship, Dynarski said. If students and parents do not understand a scholarship, which is the case with many need-based scholarships, it has a much smaller effect on their behavior.
In the 2007-2008 school year, 3,399 students at Michigan received $4,125,318 through the Michigan Competitive Scholarship, a need-based scholarship that would be merged into the Michigan College Access Fund under the new proposal.
Prof. Ed St. John, part of the Center for the Study of Higher and Postsecondary Education at the University, said the state of Michigan needs to allocate more money for need-based aid.
“It’s very difficult for low-income students in this state to pay for public four-year colleges, and that’s a big challenge for the state,” St. John said.
According to St. John, because the state has limited need-based grants, financial aid “comes at a great cost to the University.”