Drastic measures to bring the state’s spending on higher education in line with its declining tax revenues are currently taking shape in Lansing.

An education study group, commissioned by the state’s Legislative Commission on Government Efficiency, outlined several ways the state could save money over the next couple of years.

A recent report from the study group suggested abolishing the Michigan Promise Grant Program, which is budgeted at about $150 to $200 million every year. The Scholarship program accounts for 40 percent of all scholarship aid at the University.

If the state decides to follow the advice of the study group and cuts the scholarship program, students at the University who currently benefit from the scholarship will still receive money. The changes won’t be felt until the high school graduating class of 2010.

The group also suggested the state reduce across-the-board spending to higher education institutions by 7.1 percent.

Other options included merging some colleges and universities, or possibly privatizing the University of Michigan, which the commission estimated would save the state $326.7 million.

Gary Olson, director of the state Senate Fiscal Agency, who also headed the study group, said he would rather cut the scholarships than enact statewide spending cuts.

“My feeling is that if higher ed needs to be cut, cut the Promise Grant instead of funding across the board.” Olson said “You can cut direct aid to the universities and community colleges and you’ll get $200 million in savings.”

Olson said he didn’t know how likely it will be that the state will heed the commission’s recommendations.

Still, many students at the University would rather the state not cut a scholarship program.

Engineering junior Andrew Till, who currently benefits from a merit scholarship, said that scholarships are more important than ever these days.

“I think that with the economy being the way it is currently, that it’s kind of a bad idea to say ‘here’s this great school but we’re not going to give you money even though you’re a good high school student,’ ” Till said.

He added that it sends the wrong message to students because the state should be telling students that they will be rewarded for doing well in high school.

LSA sophomore Anne Lerums said scholarships help keep the student body economically diverse.

“I know that there are many students who would not be able to attend the University of Michigan if their scholarships didn’t exist,” she said. “I think that would be a huge loss for the University of Michigan to not have those students who wouldn’t be able to afford it otherwise.”

Lerums, who is on scholarship herself, said that without the tuition help she wouldn’t be able to attend the University.

Lerums also said a 7.1 percent statewide budget cut wouldn’t be ideal, but is probably preferable to a decrease in scholarships.

“I feel like there are a lot of things on the campus that we could go without,” Lerums said.

The University’s Office of Financial Aid said it’s unable to comment on the recommendations because there’s currently no formal legislation.

Olson said the commission will include its recommendations in its final report to the state legislature, which will be presented no later than September.

“What the legislature does with it is their call,” Olson said. “The commission has no authority to anything other than make recommendations.”

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