State Grant bouncing back after years of decline

On the mend (MoneyBlogNewz via Flickr)

After several years of stagnation and cuts, it appears the state’s main source of financial aid is on the rebound.

The Minnesota Office of Higher Education estimates that college students next year should receive an average of $200  more in their State Grant awards, a 12 percent increase.

That’s twice the 6 percent growth the award saw this year — and a far cry from the cuts seen during the recession.

“We should see stability from here on out,” said State Grant analyst Meredith Fergus.

The State Grant slump began after a peak in the 2006-2007 academic year. That’s when the average award was $1,947. The next few years saw steady declines until the award hit a low point of $1,349 in 2011.

This year, the average award stands at $1,624 — a rise of about 6 percent over last year.

That increase was made possible last session when the Legislature raised the State Grant appropriation by $47 million over the biennium. State higher-ed officials welcomed the boost — calling it the largest in a decade — after years of largely flat funding.

Next year’s larger awards are due in large part to declining college enrollment, Fergus said.

During the recession, people flocked to colleges and universities, causing double-digit enrollment growth at some campuses.

Many of those new students applied for the grant, which strained state resources. State officials reduced the grant in a couple of years so they could spread the limited money among more people.

In the past year or two, however, enrollment has declined by a few percent on average as students finished their degrees or jumped into the job market.

“When fewer students enroll in college, fewer students apply for the award,” Fergus said. “Therefore, we distribute the same pot of money to fewer students.”

From here on, she said, the State Grant should see smoother sailing.

“Enrollments will start to stabilize, and we won’t see huge declines or huge increases,” Fergus said. “And once we see stability in enrollments again, then spending will stabilize.”